Traditionally, if you had not sold your Neath home by the first
week in November, you would normally have to wait for the house sellers to
return in the famous Boxing Day rush on the portals (Rightmove, Zoopla etc) to
get potential buyers interested.
Yet matters have been different this year as the various lockdowns
have caused a surge in house buying right up until when the Christmas edition
of the Radio Times goes on sale.
So, the question is, how will 2022 look regarding the Neath
property market?
The last couple of years in the Neath property market have been
different in many ways. So much so, many Neath homeowners are presently
deliberating whether they should put their Neath home on the market in January
or wait until later in the summer.
Speaking to many Neath buyers and sellers, (and in fact Neath
buy-to-let landlords) in the last couple of weeks in the run-up to Christmas,
many were asking the very same question.
What
is going to happen to Neath house prices in 2022?
Some people asking this question are Neath buyers troubling
themselves that they are about to buy their Neath home just before a potential property
crash, yet others are Neath homeowners wanting to know where the top of the market
is before they sell. Even a handful of Neath landlords unable to either start buying
or start selling some of their rental portfolio.
Therefore, let’s see what has happened in 2021 to make a better
judgement of what should happen in 2022.
Nobody has a crystal ball that can tell what 2022 holds, however most
property experts are not forecasting doom and gloom for the British property
market.
Whilst the final numbers won’t be known until Easter 2022, it is
estimated that in 2021 one in fifteen privately owned homes in the UK are
expected to have changed hands, being the busiest year in the last 14 years.
Locally,
971 properties have changed hands in the last year in Neath
Although that is only up to October 2021, so numbers will be much
higher once all the final counts are in by March/April.
The pandemic made many Neath families
re-evaluate what they wanted from their Neath home, with many wanting bigger
rooms (and more of them). Many in the press dubbed this ‘the race for space’, meaning the
property market was flooded with home buyers, most bringing forward the home
move they had planned between now and 2025.
The issue was, there weren’t enough Neath properties on the market
to satisfy every Neath buyer, meaning Neath house prices have unsurprisingly
been driven up.
The
average price of a home today in Neath is £157,700
Although it is still premature to say what will happen in 2022, most
property commentators seem assured that we are not heading towards a house
price crash, mainly due to one reason.
There aren’t enough properties on the market in Neath. Simply
supply and demand economics!
The property crash in 2008 was caused by everyone dumping their
property on the market.
In
January 2007, there were 512 properties for sale in Neath, one year later in
January 2008, that had risen to 1,044 properties, whilst today, that stands at 100
And I can’t see that changing for 2022.
In 2007, mortgage interest rates were 6.5% to 7.5%, so when the
economy started to falter, everyone looked to sell their homes to reduce their
outgoings as unemployment rose by over 60% in just a couple of years. This time
round most people have mortgage rates of around 2% to 2.5% and unemployment is
dropping, meaning they don’t need to sell their Neath home.
Now of course the land transaction tax holiday came to an end
months ago, and Bank of England base interest rates are expected to rise moderately
in the coming year, yet not to the level they were in 2007 (5.75%).
Nonetheless, demand for Neath homes will still be there. I have
even read some reports suggesting that more than 20% of British households are
seriously thinking of moving between now and the summer of 2023, and this will
support Neath house prices whilst demand continues to exceed supply.
Neath
house prices will be 3.5% higher by the end of 2022
Another reason why I believe that will be the case is the return
to home working. If, as a country, we will need to work from home each winter
for the foreseeable future because of new variants, then this will cement the
need for people wanting to move home for remote working.
It might be that Neath buyers are looking for a dedicated office
at home or that they feel they now no longer need to be in large built-up areas
that are near to their work.
This increase in Neath house prices is expected to entice even more
Neath house sellers onto the market, which will steady Neath house prices
slightly (as supply increases), yet I still believe there won’t be enough properties
coming onto the market to satisfy the colossal demand.
What
about the Neath rental market?
Rents tend to grow in line with tenants’ wages. So, with many
people getting decent pay rises and not enough properties being built, many
economists are suggesting rents will be 14% to 19% higher by 2027. Even with
the house price growth, the numbers for rental investments still look rosy.
Is
it the right time to buy your first property in Neath?
This rise in Neath house prices has had many people asking whether
2022 is the right time to buy their first home? Should they buy now before Neath
prices rocket even further or delay in the hope that house prices come back
down?
As with any important decision in life, this will mainly depend on
your own personal life and your motives for wanting to move.
If the Neath home that you want to buy is on the market, available
and you can afford the mortgage, then delaying could be detrimental. It’s
like holding off for the ‘next generation TV’, it then coming out; then just as
you are about to buy the TV, the next ‘next generation TV’ gets announced for
six months’ time … and the cycle is constantly in motion – so you end up
never buying a TV … just like you will never buy your own home!
Buying
property is a long-term game
Sometimes you just have to make your decision, get something
bought and start the journey of the next 25 to 35 years of living in your
family home whilst paying off your mortgage.
The present low interest rates for first-time buyers means that
there are some very low mortgage deals available for those with a decent
deposit, making it a good time to buy a Neath property, especially if you fix
the interest rate.
If your deposit is humbler, the Government’s 5% deposit mortgage
guarantee scheme will still enable you to buy a property, albeit at a slightly
higher interest rate.
Looking at the bigger picture, these are only my opinions. If
inflation doesn’t get too out of hand and interest rates don’t go above 2% to
3%, it looks like Neath house prices will, for 2022 and a few years beyond,
continue upwards albeit with a slower trajectory
than 2020/21 and probably with a few short, sharp up and down spikes on the way.
The bottom line is, ensure that any Neath house move that you intend
to make is something that you can afford, allow for future rises in interest
rates and make plans for as many eventualities as possible. Do that, and you
should be just fine.
For any questions about the South Wales property market, reach out to our local experts today who will be happy to help.
