In the news – Wealth

Your 2022 playlist

Research studies over the years have reinforced the idea that equity prices are not solely driven by analysis of a company’s prospects but also by outside factors which can impact investor mood. Correlation has been found between improved stock market performance on sunny days or poor performance after a country loses a vital football match, for example.

A novel measure of investor sentiment has been discovered by a recent study, which apparently captures actual sentiment rather than shocks to sentiment1. A significant correlation has been determined across 40 national stock markets between weekly equity returns and the emotional content of that week’s top 200 songs on Spotify. The findings suggest that stock markets perform better when a country is listening to happier songs – ‘In our main findings, we document a positive and significant relation between music sentiment and contemporaneous market returns, controlling for world market returns, seasonalities and macroeconomic variables. Music sentiment also predicts increases in net mutual fund flows and absolute sentiment precedes a rise in stock market volatility. Our study provides evidence that the actual sentiment of a country’s citizens significantly affects asset prices.’

Whatever’s on your playlist this year, you can rely on us to take the emotion out of your investment decisions.

Risk-on, risk-off

New research2 has shown that affluent to ultra-high-net-worth UK investors are more conservative when compared with their international counterparts, as 54% of UK respondents rate themselves as conservative in their approach to risk, with the lowest percentage of any nation surveyed (10%) saying they adopt an aggressive approach. In contrast, nearly half of respondents from China rated themselves aggressive in their approach to risk, with just 19% conservative. Potentially underpinning the lower risk, long-term mindset, the primary reason for 66% of UK respondents for saving and investing is for their retirement, with 35% citing future healthcare costs and 17% entrepreneurial activities.

£810m tax relief unclaimed

Recently released data3 has highlighted that during the 2018/19 tax year, an estimated £810m in tax relief was unclaimed by over 1.5 million of the UK’s highest earners. Higher rate taxpayers benefit from 40% tax relief, but eight in ten failed to use their Self-Assessment tax return to claim it. Similarly, 53% of additional rate taxpayers failed to claim the 45% tax relief for which they are eligible.

1The London Business School, 2021

2Avaloq, 2021

3Pension Bee, 2021

The value of investments and income from them may go down. You may not get back the original amount invested.

What trends will dominate the housing market in 2022?

Last year house prices rose to new heights and the sales market was at its most active since 2007. Last year’s property boom was fuelled by a desire for more space, a mismatch in supply and demand, and the temporary Stamp Duty holiday. Looking ahead, what trends will dominate the housing market in 2022?

Strong finale

More than 1.5 million homes were set to change hands in 2021, while the average UK house price hit a record high of over £270,000 in November1. According to the latest figures, the annual growth rate is at 8.1%. Will this growth be sustained into 2022?

Uncertain outlook

One prominent estate agent2 has predicted that house prices will increase by 7% in 2022 in a ‘best case’ scenario, though it also made a ‘downside’ prediction of 2% growth. It remains to be seen how much impact an expected rise in the Bank of England’s base rate will have on the market.

Robert Gardner, Nationwide’s Chief Economist, thinks any increase will have minimal effect given that most mortgages are now on fixed rates, “Even a 0.4% increase in rates (to 0.5%) is likely to have a modest impact on most borrowers who are on variable rates. For example, on the average mortgage, an interest rate increase of 0.4% would raise monthly payments by £28 to £625.”

Regional differences

Another pattern to watch out for is how regional discrepancies change. Variation is currently high across different regions. For example, the North West of England was the strongest performing region in 2021 with annual growth of 10.4% (to October) compared to London’s rise of just 2.8%. Yet, the average property price in the North West (£205,881) remains far below the average in the capital (£514,907).

House prices also saw strong growth in Scotland, with the average property now costing £190,023 following year-on-year growth of 8.6%.

Here to advise

Finding a suitable mortgage and the right protection cover can be tough, especially in a rapidly moving property market. We can assess a wide range of mortgages and protection policies and advise on which ones are best suited to your circumstances.

1Halifax, 2021

2Strutt & Parker, 2021

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.

Prepare with confidence

If you are in the dark about how to prepare for retirement, then join the club. Nearly half (47%) of working age people are a bit lost when it comes to getting their retirement planning in the right place1.

The research also shows that just 28% feel secure in their understanding of how to manage their pension as they approach retirement, while fewer still (27%) have an idea of what a ‘good’ amount of pension savings is for someone of their age.

‘On the back foot’

The gender pension gap once again rears its ugly head in the research, with women almost twice as likely (21%) to say they feel completely ‘on the back foot’ than men (12%). Women are also more than twice as likely to lack understanding of how to manage their pension in the runup to retirement (34% of women vs 14% of men).

A confident approach to retirement

Managing Director at Aviva, Mary Harper, commented, “It’s very easy to put thoughts about later life to the back of your mind but investing time in thinking and planning ahead can make a world of difference to your options… evidence suggests that people who access financial advice are, on average, tens of thousands of pounds better off in the long-term.”

We can offer expert guidance and advice to help you manage your retirement planning with confidence.

1Aviva, 2021

The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

News in Review

“Although supply chains remain severely stretched, there are at least signs that the situation is stabilising”

As the new year takes root, the latest IHS Markit/CIPS Purchasing Managers’ Index has highlighted an elevated level of optimism amongst UK manufacturing firms. Although supply issues and staff shortages continue to hamper growth in the sector, production rose at the end of last year and output ticked up across the consumer, intermediate and investment goods sectors.

Despite inflationary pressures and higher prices being passed onto customers, many participating companies kicked off the year on a positive footing, with the majority of firms (63%) expecting production to increase in 2022, a favourable comparison to the 6% of respondents predicting contraction. This largely positive outlook reflects expectations of renewed global economic growth, planned investment activity and hopes for less disruption from the pandemic, Brexit and supply chain issues.

Rob Dobson, Director at IHS Markit, commented on the findings, “UK manufacturing production rose at the quickest pace in four months in December, supported by increased intakes of new work, efforts to reduce backlogs of work and higher employment. While the uptick in growth is a positive step, the upturn remains subdued compared to the middle of the year.”

He continued, “Although supply chains remain severely stretched, there are at least signs that the situation is stabilising, with vendor delivery times lengthening to the weakest extent for a year in December. This helped take some of the heat out of input price increases, but cost inflation remained sufficiently steep to necessitate the sharpest rise in factory gate selling prices on record. With restrictions and Omicron cases both rising, the growth and inflation backdrops could change again in the early part of 2022.”

Oil on a roll

After the brutal impact of the pandemic on oil demand and pricing, a positive stance was expressed by the Organization of the Petroleum Exporting Countries and allies (OPEC+) last week, when it signalled an expectation that the Omicron variant will only have only a ‘mild and short-lived’ limited impact on oil demand. This viewpoint prompted them to continue with the planned 400,000 barrels-per-day production increase due to commence next month. Brent crude rose above $80 a barrel last week for the first time since November following the announcement. As OPEC maintains a firm grip on supply, it seems that many oil producers are planning to carefully control capital spending this year despite the price rebound.

Markets update

In the UK, travel companies were lifted on last week’s news that pre-departure travel tests will end for fully vaccinated travellers and day two PCRs will be replaced by lateral flow tests. The overhaul of the system came after travel firms said the measures were ineffective due to the worldwide spread of Omicron. After a lacklustre start to the week on Monday, the FTSE 100 closed Tuesday on 7,488.09, led by fashion retailers, Next and JD Sports, as well as mining companies and gambling firms.

US indices closed out the first trading week of the year in the red as investors considered the latest labour report, and the economic impact staff shortages is having. The December Federal Reserve minutes, also released last week, indicated that some officials were inclined to speed their asset-purchase tapering and bring forward an initial interest rate hike. Wall Street’s main indices advanced on Tuesday, after Federal Reserve Chairman Jerome Powell told congress, “If we see inflation persisting at high levels, longer than expected, if we have to raise interest rates more over time, then we will.”

House prices see fastest growth for 17 years

According to the latest data from the Halifax, UK house prices rose at a faster rate in 2021 than in any calendar year since 2004, with prices increasing by 9.8%, taking the average UK property price to £276,091, which is an increase in cash terms of more than £24,500 compared to December 2020.

Russell Galley, Halifax’s Managing Director said, “The housing market defied expectations in 2021, with quarterly growth reaching 3.5% in December, a level not seen since November 2006. In 2021 we saw the average house price reach new record highs on eight occasions, despite the UK being subject to a lockdown for much of the first six months of the year.“

Here to help

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

Money for new homes in the Autumn Budget

The Autumn Budget included fresh spending pledges on housing from the Chancellor, with £1.8bn set aside to assist housing supply via land regeneration.

Community focus

The additional funds are aimed at delivering 160,000 new homes and will be divided into two parts:

  • £300m for councils and combined authorities to help them unlock smaller brownfield sites for housing “and improve communities in line with their priorities”
  • £1.5bn to “regenerate under-used land and deliver transport links and community facilities.”

Chancellor Rishi Sunak said, “We are investing in better quality, safer, greener and more affordable homes to create thriving places where people want to live. Transforming our unloved and neglected urban spaces will help protect our cherished countryside and green spaces, while improving the physical and mental health of our communities.”

More promises

As well as the headline pledge, the Budget also reconfirmed £11.5bn through the Affordable Homes Programme (2021-26), promised an additional £65m investment to improve the planning regime through a new digital system, and confirmed more than £5bn to remove unsafe cladding from the highest-risk buildings.

Great expectations as a new year dawns

We could be forgiven for focusing on life’s trials and tribulations heading into 2022, given the challenges that we’ve faced over the last couple of years. Despite inflation-related concerns, new COVID variants and supply chain disruption, which may be disconcerting for investors, there are indications that the coming year will present opportunities as well as risk, as we hopefully venture towards post-pandemic life.

International soothsayer, the International Monetary Fund (IMF) predicts a continuation of the global recovery in 2022, forecasting growth of 4.9% for the world economy. Its analysis did, however, acknowledge that the level of uncertainty encircling prospects has intensified with policy choices becoming increasingly complex.

Taking steps to inflation-proof your wealth

Rising inflation and global supply chain issues have undoubtedly generated a policy dilemma for central banks. These dual concerns have heightened the need for investors to employ considered strategic thinking, enabling them to reposition their portfolios in order to take advantage of growth opportunities, while ensuring their wealth is inflation-proofed.

Investment scam-savvy

As the year progresses, although the spectre of rising inflation is expected to see central banks tighten policy, deposit-based savings rates are forecast to remain at historically low levels. Such small returns have prompted many savers to move their money into investments, with research suggesting over half of all adults have done so. This shift has raised concerns that unrealistically high return expectations could leave some investors vulnerable to investment scams.

Take control

Although 2022 is likely to present ongoing challenges, the key to successful investing remains adopting a carefully considered strategy based on sound financial planning principles. Attractive investment opportunities will undoubtedly be available as the year progresses. With our help and careful repositioning of your portfolio, you should be able to make the most of these as and when they arise.

The value of investments and income from them may go down. You may not get back the original amount invested.

Building financial resilience in 2022

The new year is the perfect time to reassess how your finances are faring and take advantage of any opportunities that may lie ahead. Household budgets are likely to be stretched in 2022, with rising inflation and tax increases already on the table. It makes sense to quantify your assets and position them appropriately to build financial resilience for your future.

Millions forecast to be worse off

Analysis by the Institute for Fiscal Studies (IFS) shows that living standards are set to stagnate over the next few years. This year specifically, an average middle-income earner will see take-home pay fall by around 1% as soaring household bills and an increased tax burden outpace any anticipated rise in wages. Research1 also highlights the pandemic’s impact on finances, with almost 16 million people feeling more financially vulnerable than before the pandemic.

Plan for your future

This situation is exacerbated by the fact people typically devote relatively little attention to financial matters. For example, one study2 found that more than four in ten adults would either struggle to locate and access their pension, or said they had ‘no idea’ whatsoever about their pension pots.

Building financial resilience, however, lessens the impact of any unforeseen circumstances and ensures you are prepared for life’s key events, such as retirement. It’s therefore vital to plan now for the future you deserve.

Inflation-proof your finances

Inflation can erode savings quickly and is a growing concern for many. As a result, savers have been increasingly switching money from deposit-based accounts into investments – research3 suggests over half of UK adults have already done this.

Diversification

The spectre of rising inflation certainly means investors need to carefully consider how to inflation-proof their portfolios. As always, maintaining a diversified range of investments is key, with appropriate portfolio construction enabling successful navigation through any periods of uncertainty.

1Royal London, 2021

2money.co.uk, 2021

3Aegon, 2021

The value of investments and income from them may go down. You may not get back the original amount invested.

Economic Review – December 2021

Bank sanctions December rate rise

The Bank of England (BoE) sanctioned a 15-basis-point increase in its main interest rate on 16 December and warned that inflation is now likely to hit 6% by spring.

At its latest meeting held in mid-December, the BoE’s nine-member Monetary Policy Committee voted by an 8-1 majority to raise Bank Rate to 0.25% from its previous historic low of 0.1%. This was the Bank’s first rate hike in more than three years and resulted in the BoE becoming the world’s first major central bank to raise rates since the onset of the pandemic.

The announcement was made a day after the Office for National Statistics (ONS) released the latest inflation data, which showed the cost of living is now rising at its fastest rate for 10 years. In the 12 months to November, the rate of inflation, as measured by the Consumer Price Index (CPI), surged to 5.1%. This was significantly higher than October’s 4.2% figure and above all forecasts in a Reuters poll of economists.

Speaking after announcing the rate hike, BoE Governor Andrew Bailey said that an outlook for “more persistent inflation pressures” had forced the Bank to act. Mr Bailey said, “We’re concerned about inflation in the medium term and we’re seeing things now that can threaten that. So that’s why we have to act.” 

The Governor also revealed that the Bank now expects the CPI inflation rate to peak at around 6% in April, which would be three times above the BoE target figure. Although the rate is then expected to fall back across the second half of 2022, the Bank acknowledged that more “modest tightening of monetary policy” over the three-year forecast period “is likely to be necessary” in order to ensure inflation sustainably returns to its 2% target level.

UK growth rate stutters

Gross domestic product (GDP) figures released last month show the UK economic recovery had already lost momentum even before the emergence of the Omicron variant.

The latest GDP statistics show the economy expanded by just 0.1% in October, much weaker than the 0.4% consensus forecast predicted in a Reuters poll of economists. Growth was largely driven by a rise in face-to-face GP appointments at surgeries in England, although this was offset by a decline in industrial output, with production falling in both the electricity and gas, and mining and quarrying sectors.

In addition, a revision to previous GDP data revealed that the economy had actually grown at a slower pace during the third quarter. The new estimate puts July to September’s growth rate at 1.1%, rather than 1.3% as initially thought. As a result, the UK economy remains 1.5% smaller than its pre-pandemic level.

More recently, economic activity has been hit by the spread of the Omicron variant. Preliminary data from last month’s IHS Markit/CIPS Purchasing Managers’ Index (PMI) pointed to a sharp slowdown in UK private sector growth as rising virus cases hit consumer services spending.

The flash reading of the PMI’s composite output index fell to a 10-month low of 53.2 in December, leading CIPS Group Director Duncan Brock to describe the data as “grim news” for the UK economy. Mr Brook also said that positive gains over the last ten months had been “wiped out by yet another round of restrictions and curbs on consumers and businesses.”

Just before Christmas, the Chancellor unveiled a £1bn support package to help businesses hit by rising cases.

Markets (Data compiled by TOMD)

Major global indices closed December in positive territory. Despite escalating virus cases, stocks were supported by hopes that the Omicron variant is milder, potentially limiting fiscal impact as vaccines have allowed many economies to remain open.

In the UK, the FTSE 100 ended the year up 14.3%, registering its best annual gain for five years, as it continued to recover from its pandemic-induced lows of 2020. The FTSE 250, dominated by more domestically focused stocks, rose by 14.6%, while the AIM closed the year up just over 5%.

Wall Street led the way, with the Dow close to a record high at the end of December, rising over 5% in the month and by 18.72% in 2021, while the NASDAQ closed the year up over 21%. The US economy has proven resilient in the face of pandemic-related challenges. As with other global economies, inflation will be a focal point for investors going into 2022. Meanwhile, the Nikkei 225 ended the year on 28,791.71, up over 4.9%, its highest year-end level since 1989, and the Euro Stoxx 50 closed the year up just over 20% on 4,298.41.

On the foreign exchanges, sterling closed the year at $1.35 against the US dollar. The euro closed at €1.18 against sterling and at $1.13 against the US dollar.

Brent crude closed the year trading at around $78 a barrel, an annual gain of over 51%, its largest in 12 years. The price was lifted by higher demand as investors bet that surging virus cases would not derail the global economic recovery. Cautious production increases by OPEC+, the Organization of the Petroleum Exporting Countries plus allies, also helped to support the price. Gold is trading at around $1,805 a troy ounce, a loss of over 4.8% on the year. The price has been dampened by a stronger US dollar and the threat of a pullback in stimulus by major central banks, deterring many investors who favoured equities.

Labour market remains resilient

The latest set of employment statistics published by ONS suggests the UK labour market has withstood the end of the government’s furlough scheme and remains in a relatively robust state of health.

According to the most recent tax data, the number of people in payrolled employment continued to grow strongly, rising by a further 257,000 in November. This was the largest monthly increase since records began in 2014 and lifted the total number of workers on company payrolls to 29.4 million, 424,000 above pre-pandemic levels.

There was also positive news in terms of unemployment, with the headline rate in the three months to October falling to 4.2%; down from 4.3% in the previous three-month period. This suggests withdrawal of furlough at the end of September has not sparked a significant rise in redundancies. Although ONS did caution that some workers may still be working notice periods, it also said business survey responses suggest the number of redundancies was likely to be relatively small.

The data also showed job vacancies rising to another record high, with a total of 1.22 million jobs advertised in the three months to November. ONS did, however, report a slowdown in the rate of growth in vacancies.

Omicron hits retail sector

While the latest official statistics revealed stronger than expected retail sales growth in November, more recent survey evidence shows concerns over the Omicron variant has hit activity on the High Street.

ONS data showed that total retail sales volumes rose by 1.4% in November, beating analysts’ expectations of a 0.8% rise. ONS Statistician Heather Bovill said sales were boosted by “strong Black Friday and pre-Christmas trading” adding that “clothing stores fared particularly well and exceeded their pre-pandemic level for the first time.”

The latest Distributive Trades Survey published by the Confederation of British Industry (CBI), however, suggests sales growth fell back sharply last month, with its headline net balance of retailers reporting sales growth slumping to +8 in December, down from +39 the previous month. This represents the lowest reading since non-essential shops were in lockdown last March.

Perhaps unsurprisingly, the survey also found that sales are expected to grow at a similarly lacklustre pace in January. Commenting on the data, CBI Principal Economist Ben Jones said, “Our December survey confirms what we’ve been hearing anecdotally about Omicron’s chilling impact on activity on the High Street, with retail sales growth slowing and expectations for the coming month sharply downgraded.”

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

News in Review

‘2022 will be defined as the year of the squeeze’

As wages stagnate, and energy bills and taxes rise, the latest quarterly Labour Market Outlook released by the Resolution Foundation has warned that millions of families face a ‘year of the squeeze’ in 2022, potentially leaving the average household £1,200 worse off. The expected rise in the energy price cap and National Insurance contributions in April are key contributors, culminating in what the report calls an overnight ‘cost of living catastrophe.’

With inflation predicted to peak at 6% in the spring, its highest level since 1992, the Foundation warned that real wage growth, which was flat in October, ‘almost certainly started falling last month and is unlikely to start growing again until the final quarter of 2022.’

With the coming months set to be challenging for household finances, Chief Executive of the Resolution Foundation, Torsten Bell, commented on the findings, “2022 will begin with Omicron at the forefront of everyone’s minds. But while the economic impact of this new wave is uncertain, it should at least be short-lived. Instead, 2022 will be defined as the ‘year of the squeeze’… Top of the government’s New Year resolutions should be addressing April’s energy bills hike, particularly for the poorest households who will be hardest hit by rising gas and electricity bills.”

One year on…

A year has passed since the UK-EU Trade and Cooperation Agreement (TCA) was signed, and the British Chambers of Commerce (BCC) survey on the impact of Brexit’s first year has revealed some interesting findings. Providing an insight into the experiences of businesses and how they are dealing with the changes to the UK-EU trading relationship, unsurprisingly the proportion of firms reporting difficulties following the trading changes has increased since January last year. Key findings show that 45% of firms reported difficulties adapting to the rule changes for buying or selling goods bought about by the TCA, whilst 15% found it easy. Almost a quarter (23%) of firms encountered difficulties buying or selling services, whereas 14% found it easy.

Although reasonable worst-case scenarios were avoided, there was a significant material hit to trade, particularly in the first two months of 2021. UK exports later recovered, but not fully – some sectors such as clothing and food are still experiencing difficulties. Total UK-EU trade missed out on a global rebound in trade in 2021 and remained at the very low levels seen in 2020.

Director General of the BCC, Shevaun Haviland, commented on the findings, “While the data does suggest, one year into the implementation of the deal, that trade is becoming more difficult rather than smoother, we do believe there are solutions which can improve conditions for our import and export businesses. These data certainly do illustrate that the issues with the TCA are not ‘teething problems’  but more structural defects that, whilst fixable, if not attended to will lead to long term damage to our import and export sectors.”

She continued, “We hope that these figures, along with our report detailing the experiences of businesses and suggesting ways forward, will provide an opportunity for an honest dialogue about how we can improve our trading relationship with the EU.”

Decline in UK air travel

A new report from aviation analytics firm Cirium has provided insight to the devastating impact of the pandemic on international travel, showing a 71% decline in international flights in and out of the UK in 2021 and a decline of almost 60% in UK domestic flights. Although the US only reopened its borders to UK travellers in early November, the busiest international route was between Heathrow and New York’s JFK Airport.

Markets

In the last trading week of the year, despite escalating virus cases, stocks were supported by hopes that the Omicron variant is milder, potentially limiting the economic impact. The FTSE 100 recovered to pre-pandemic levels and ended the year up 14.3%, registering its best annual gain for five years. In the US, the Dow Jones closed the year up 18%. Brent crude closed the year trading at around $78 a barrel, an annual gain of over 51%. The price was lifted by higher demand and cautious production increases by OPEC+.

Plan B to continue

In a Downing Street briefing on Tuesday, Boris Johnson said he hopes England can “ride out” the Omicron wave without further restrictions and announced plans for critical workers to take daily virus tests.

Here to help

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

Residential Property Review – December 2021

Slowing activity but demand remains high

New buyer enquiries rose slightly in the Royal Institution of Chartered Surveyors’ (RICS) November survey, with a net balance of +13%, while new instructions fell for the eighth successive month to -18%.

The end of the Stamp Duty holiday, among other factors, has contributed to a dip in housing market activity, with Q3 recording a 26% fall in purchases compared to the previous quarter, according to UK Finance data. Despite this, Q3 purchases remained 10% higher than their 2019 equivalent.

The largest growth in the recent data came in the rental market, with rent increases at a 13-year high. Average rent, excluding London, now stands at £809 per month, according to Zoopla’s latest Rental Market Report.

Tenant demand returned a net balance of +48% in November and RICS foresees further upward movement in rent prices because of this demand and a shortage of rental properties. The rental market is currently strongest in the central zones of major cities, where demand is twice as high as in outer zones.

Race for space? That’s so 2020

Growth in the price of flats is now outpacing growth in the price of detached houses, Halifax’s latest House Price Index has revealed, a sign that the ‘race for space’ that characterised the 2020 housing market could be fizzling out.

At the height of the lockdowns in 2020, demand for space soared as people worked from home and the government introduced the Stamp Duty holiday. Now, however, this trend seems to be reversing, as city centres become more appealing again: in November, flats were selling 10.8% higher year-on-year, compared to the 6.6% average rise in the price of detached houses.

Tim Bannister of Rightmove commented, “A shift in demand from bigger houses to flats has emerged as more of society has opened up again and people have assessed where they will work throughout the week, with many now considering a move closer to a city than further out.”

Unrelenting demand and uncertainty for the year ahead

House prices will soar ever higher in 2022, according to Rightmove, as sustained buyer demand and historically low levels of available property endure.

Several uncertainties continue to loom over the housing market, including the threat posed by the Omicron variant, which could have a significant impact on supply and demand, as well as playing a role in any possible rise to the Bank of England’s base rate.

Even so, the latest analysis from Rightmove predicts that house prices will rise nationwide in 2022 by 5%. Despite an expected increase in listings next year, these will likely still struggle to keep pace with persistent demand.

According to Rightmove’s Tim Bannister, the “imbalance between supply and demand has resulted in buyer demand per available property being at near-record highs, suggesting that the 2021 scenario of multiple buyer bids on a high proportion of properties when they come to market is set to continue in the new year.”

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.