Published: February 16, 2022

UK Property Market Forecast 2022

Written by Amber Furr
UK Property Market

As we come towards the end of 2022’s first quarter, we are reminded of the strength and resilience of the UK property market. With house prices rising at the fastest rate since 2007, and rents hitting double digit growth in some areas of the country, the post-pandemic property boom has seen many investors looking for their next investment opportunity. But where is the place to invest in 2022?

This guide aims to educate first-time and seasoned investors on the key attributes of a strong and successful property investment in 2022. First reflecting on the key learnings of 2021, exploring the impact of the pandemic and the associated behavioural trends that are here to stay; moving into the property market forecasts for 2022, including projected house price inflation, prime investment hotspots, rental increases, supply and rental demand and the changing priorities of today’s renters.

UK Property Market 2021

Property prices have risen consistently throughout 2021, with the second half of the year considered the ‘post-pandemic property boom’. UK house prices grew at the fastest rate in 15 years over the past three months, with the average home valued at GBP 20,000 more than this time last year, according to Halifax.

In fact, house prices rose by 3.4% in the quarter to the end of November, which is the highest quarterly rate since late 2006 and brought the average price of a home to a record of GBP 272,992.

The strong performance of the UK housing market throughout 2021 is underpinned by a range of factors. The main one being the UK’s ongoing housing shortfall, with government plans to build 300,000 new properties a year just to meet pent up demand. Other well-established factors are the stamp duty holiday (expired September 2021); a competitive job market; changing tenant priorities and a ‘reassessment of home’; urbanisation as millions of tenants return to the office; and better mortgage interest rates for first-time buyers.

With the stamp duty holiday extension finishing in September 2021, the final quarter of the year has given a strong indication into what we can expect in 2022, which the next section of this article will explore. After a long period of remote working for almost 50% of the UK workforce (86% of which did so as a result of the pandemic), tenants returning to the office has triggered strong rental growth in the UK’s largest urban centres. The ongoing uncertainty with regards to home working since Boris Johnson’s announcement on the 8th of December isn’t expected to reverse this widescale urbanisation trend.

This strong demand in city centres such as Birmingham and Manchester is driving rents as well as property prices. In fact, November 2021 saw unprecedented rental rises in Manchester, with values increasing by up to 17.5% for some unit types according to Urban Bubble. Similarly, recent data from Rightmove’s quarterly Rental Trends Tracker reveals that Birmingham has not only bounced back from the declines caused by the pandemic but has overtaken the national average, at 10% higher than pre-pandemic levels.

UK real estate

House Price Growth

Rightmove have predicted that the national asking price of a property, which is currently at GBP 342,401, will rise by 5% in 2022, meaning an increase of around GBP 17,000.

As mentioned above, since the stamp duty holiday expired in September 2021, there is a clearer indication of what to expect from the 2022 housing market. Property prices in the sector rose for a fifth consecutive month by 1% in November 2021 and were 8.2% higher than the same time a year earlier. Rising by 3.4% in the quarter to the end of November, this is the highest quarterly rate since late 2006.

This growth is expected to continue throughout 2022, due to ongoing factors such as the supply and demand imbalance, workers returning to the office, and greater expectations from people’s living experiences. Supporting these projections, Zoopla Research recently conducted a survey of UK households which found that 22% remain ‘eager’ or ‘very eager’ to move home in the next 18 months as a direct result of the pandemic. Paired with most companies embracing a mix of home and office working (43 out of 50 of the top UK companies), more households will reconsider factors such as location and space to work at home. JLL predict that cities will bounce back more strongly in terms of house price growth in 2022-2023 for this reason.

Which regions are seeing the biggest growth in house prices?

JLL’s 2022-2026 residential forecast report explores the top performing regions and cities, considering all social, economic and market factors to create the most accurate forecast.

The West Midlands – home to Birmingham – is the region expected to lead the growth of house prices in the UK, with 7% expected growth, 2% above the national average. Scotland, Yorkshire and the South West are also expected to see similar levels of growth, while London is the region expected to see the lowest growth in house prices, at an estimated 3% for 2022.

Birmingham (6% house price increase forecasted for 2022)

With average house prices at GBP 233,148 and an expected increase of 6% in 2022, Birmingham’s expected average house price is GBP 247,136 for 2022. As one of the biggest beneficiaries of HS2, an additional 6,300 jobs have been created in the city by HMRC, attracting high-earning individuals – the prime demographic of the Build to Rent tenant. Birmingham is also hosting the Commonwealth Games in 2022, increasing its presence on the international consciousness. It is clear to see why this is the UK city expected to see the highest level of house price growth over the next five years (JLL).

Manchester (6% house price increase forecasted for 2022)

With average house prices at GBP 247,726 and an expected increase of 6% in 2022, Manchester’s expected average house price is GBP 262,589 for 2022. Manchester is set to see the highest rate of economic growth of all the major UK cities over the next five years with GVA growth of 16.4% according to Oxford Economics. With the same expected property price inflation as Birmingham, both are well-established cities with vast potential for development and investment, despite unfounded concerns this year about an oversupply of residential property in Manchester.

Bristol (5.5% house price increase forecasted for 2022)

With average house prices at GBP 362,388 and an expected increase of 5.5% in 2022, Bristol’s expected average house price is GBP 382,319 for 2022. The same report forecasts Bristol as a city of strong growth, which is expected to see the second highest increase in GVA of the major UK cities (15.6%) and highest increase in average weekly earnings (14.7%) over the next five years, according to Oxford Economics.

In a nutshell, whilst there will continue to be strong growth in house prices, this will naturally be at a slower rate to reflect the removal of the stamp duty holiday, the removal of furlough and some Brexit-related uncertainty.

Sustainable rental growth in the UK housing market

The private rented sector is expected to rise by 4.5% nationally in 2022 according to Zoopla – a strong message for investors. Their UK Rental Market Report shows that average UK rents were up 4.6% in the year to October 2021, after climbing 3% in Q3 as demand soared in city centres.

Once again, this performance of city centres is triggered by tenants returning to the office for at least part of their working week. In fact, rent increases have hit a 13-year high as demand for property doubles in the central zones of major cities. And for the first time in 16 months, London rents are rising. This comes at a time where the RICS September survey recorded the largest-ever gap between tenant demand and rental supply.

With a third of millennials now expected to rent their entire lives, people are willing to pay a premium for their desired living experience. Typically, this means a prime city centre location and amenities including a gym and co-working areas as standard. Renting remains a far cheaper way to achieve this luxury lifestyle, without the commitment of being ‘tied down’ to one location for young professionals. Also due to the increased cost of living such as energy bills and national insurance contributions, many can’t afford to get on the property ladder.

Put simply, while renters are returning to cities, residential property supply cannot keep pace with demand. This means now is a prime time to develop and invest in these regional major cities such as Manchester and Birmingham.

The ‘ones to watch’ for 2022 and beyond

November 2021 saw unprecedented rental price rises in Manchester, with values increasing by up to 17.5% for some unit types in just one month alone. Rightmove reported a 69% year-on-year increase in rental enquiries in the city, with 75% less vacant properties available to rent in Manchester than the same time last year.

It’s a similar story for Birmingham, in which demand saw rents rise to 10% higher than pre-pandemic levels in September 2021, according to Rightmove. With the creation of around 10,000 new jobs being created across different sectors, major blue-chip employers such as Goldman Sachs setting up headquarters there, mass regeneration activity taking place and the implementation of HS2, Birmingham’s rents are expected to rise further as the city establishes itself on the global consciousness. Birmingham is the UK city forecasted by JLL to see the most rental growth in the next 5 years.

Changing priorities of ‘the home’

Throughout the pandemic, our lives revolved around our homes more than at any other time in recent history. Naturally, this resulted in a ‘reassessment of home’ and in most cases a ‘race for space’, as people craved larger living areas to accommodate home working, home-schooling and everything in between.

Although most people have returned to the office at least some of the time, this trend is here to stay as renters and buyers are still seeking more space. However, as previously discussed, this hybrid working policy many companies are adopting maintains the need for tenants to commute to work. For this reason, Build to Rent properties with more space and amenity in regional cities such as Manchester and Birmingham are seeing record-breaking demand.

Hybrid working has also triggered an increase in unused office space, which will likely be transformed or rebuilt into purpose-built residential property – a strong message for the thriving Build to Rent sector.

The Build to Rent sector directly caters to this changing tenant demand for co-working space, access to outdoor green space, amenities such as a gymnasium, resident lounges, and a pet-friendly ethos – another lockdown trend here to stay! Find out more in our blog on 6 Tenant Priorities in Today’s Rental Market.

In search of larger living areas, outdoor space and other amenities, we are seeing a growing trend of Londoners migrating the capital in search of – a trend only expected to increase as HS2 cuts the commute time from Birmingham to London from 1.5 hours to just 49 minutes.


In summary, while the 2022 UK housing market is expected to perform exceptionally well as the ongoing housing shortfall and pandemic-related trends continue to have a long-term impact, the market will be less frenetic and more stable than in 2021. This restored confidence in the resilience of UK property will strengthen the market further, leading to more development and investment activity.

At the start of an exciting long-term growth curve, Birmingham is a prime investment location for 2022, with the strongest house price and rental growth forecasted of all UK cities in the next five years. Manchester is also ‘one to watch’, maintaining its position as a well-established investment hotspot with a skyline evolving as rapidly as its rental growth. The future is looking very bright indeed for these cities.

Find out about our latest investment opportunities in the UK’s strongest cities. Or subscribe to our Property Insights Podcast on Spotify, Apple Podcasts or Google Podcasts to stay up to date with market insights and top property investment tips.

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