Back in December, Advantage looked at housing sector predictions for 2022 and suggested that:
“For the time-being, the consensus seems to be that 2022 will be another year of house price growth.
“However, with predictions varying, we’ll have to wait and see whether that growth translates into an “extremely strong” or “normal” level of transactions.”
According to its latest House Price Index, Rightmove found the average asking price of a property was £341,019 in January 2022 (7.6% higher than in January 2021).
Meanwhile, housebuilding activity is expected to grow modestly over the next two years but will fail to reach the levels seen in the year prior to the pandemic, a report has forecast.
The industry should expect growth in output of around 3%
Housing Today reported that the latest forecast from the Construction Products Association (CPA) said the industry should expect growth in output of around 3% both this year and next, with the failure to return to pre-pandemic levels a result of the steep fall in public housebuilding during 2020.
The CPA said it estimated that housing output was £42.4bn in 2021, and will rise to £43.7bn this year and to £45bn in 2023, with 3% growth forecast in both public and private housebuilding in both years. This compares with output of £46.2bn in 2019, prior to the coronavirus pandemic.
Housing Today said the report added worries over sufficient materials, products, labour, HGV drivers and imports remained, with SMEs and smaller specialist sub-contractors likely to feel the pinch more than larger firms.
Major house builders and contractors less affected by supply chain issues
CPA economics director Noble Francis said:
“Major house builders and main contractors are less affected as they have better visibility of medium-term demand and can plan and purchase well in advance; plus, they are the larger customers of the manufacturers, builders’ merchants and importers.
“Smaller firms, however, have found that availability issues have delayed projects and, consequently, revenue streams whilst sharp cost increases have hit margins, harming their viability even though they have strong workloads.”
Advantage’s view: Most analysts currently anticipate that we’ll continue to see growth in both housebuilding and house prices this year, although as noted above, the former may be dampened somewhat by supply chain issues. At the time of writing, steady growth looks most likely, potentially with fewer headline grabbing house price records set than we saw in 2021.
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