Market insight – what our most viewed content tells us about 2022 property trends

Here we take a look at the most viewed articles from the Knight Frank research teams to get an insight into what real estate investors are most interested in.

It was a turbulent year from an economic and political point of view, a break down in supply chains, underperforming global economies still reeling from Covid, and the invasion of the Ukraine by Russia sending energy and food prices soaring.

Rising inflation tempered by the continual hiking of interest rates in America, the UK, Europe and in many other countries meant the cost of borrowing money increased too.

In the UK, mortgage affordability became squeezed following an Autumn budget like no other under new PM Liz Truss that spooked the markets.

Below is our top five ranking articles for pageviews in 2022:

1. UK House prices revised up for 2022
2. UK House Price Forecast 2022: prices to fall as mortgage costs rise
3. Logistics: strengths, weaknesses, opportunities, and threats amidst rising uncertainty
4. Saudi Arabia’s Vision 2030 real estate and infrastructure projects top US$1.1 trillion
5. Brexit & Second Homes in France: What you need to know

Our review of the top five begins in June in the UK as house price forecasts looked positive.

Britain in ignorant bliss with positive house price predictions

In at number one and topping the charts since June, outdoing Bryan Adams 16 week record stint at the top of the UK music charts with “(Everything I Do) I Do It For You”, is Tom Bill’s UK house price forecast.

It’s hard to believe but the beginning of June was a relatively stable political period.

Having said that, PM Boris Johnson had been caught up in a number of scandals ranging from ‘partygate’ to his handling of a report of alleged inappropriate behaviour by Chris Pincher, deputy chief whip, at the time.

The pressure was mounting and this latest scandal would ultimately lead to members of his cabinet advising he step down, despite Mr Johnson winning a no-confidence vote only weeks earlier.

Despite all this, and ongoing worrying economic indicators, the UK housing market was forecast to perform well.

Tom Bill, head of UK residential research, pointed this out in his opener.

“Housing market statistics continue to sit uncomfortably alongside other UK economic indicators.

With inflation at a 40-year high and interest rates at their steepest in 13 years, annual house price growth rose to 12.4% in April, data from the ONS showed last week.”

A more traditional indicator of house prices, supply v demand, told the story in more detail.

“Low supply has been the key story of the pandemic for the UK housing market. It has largely failed to keep pace with demand, particularly during the frenetic conditions of the stamp duty holiday, and put upwards pressure on prices.”

Despite the sales and rental markets continuing to perform, a turbulent pollical period soon changed that, in dramatic fashion.

Read more here

UK house prices slide as lettuce outstays new PM

Tom Bill emulates the Beatles, Madonna, and John Lennon to name but a few by occupying a number one and two spot in the charts. Here he revises down his UK house price forecast.

Following a tricky start to the premiership of newly installed UK PM Liz Truss, after Boris Johnson resigning, which included a widely-panned (including by her own party) budget announcement, Tom Bill revised his forecast down in October.

The disastrous budget saw borrowing rates go up and the value of the pound go down. This, together with other factors, such as inflation and tightening household budgets meant house prices were not immune to downward pressure.

The knock-on effect on house prices and mortgage affordability led to UK house price forecasts becoming must-have information for homeowners, investors and landlords alike.

“We expect prices in the UK to fall by 5% next year and in 2024. This represents a total decline of almost 10% and takes house prices back to the same level as last summer.”

Despite this, rental forecasts had risen in London.

“At the same time, we have revised up our forecast for rental values, as low supply continues to push rents higher. We forecast 15% growth in PCL this year and 12% in POL. Next year, we have revised up our forecast to 6% from 3.5% in both areas.”

During her time in office, Liz Truss became a record breaker – lasting just 44 days as Prime Minister she is now the shortest serving PM in UK history and ultimately lost her battle against the lettuce.

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Not all doom and gloom as logistics market offers investor opportunity

In at three it’s all about logistics as opportunity knocks.

Moving away from Westminster scandals and party politics, the third most viewed article of 2022 looked at how the global logistics market was coping in uncertain times.

Supply chain issues evolving from the aftermath of Russia’s war in Ukraine hit the logistics and industrial industries hard. As well as the human tragedy that unfolded, the global nature of trade came under scrutiny.

Opportunities in these industries were still present, which were borne out in the logistics ‘The House View’ feature that provides a snapshot of various real estate markets, being the third most popular article.

Claire Williams, industrial and logistics, highlighted some of the issues impacting consumer demand.

“Weaknesses stem from faltering consumer demand, slowing e-commerce growth, as well as inflationary pressures and geopolitical uncertainties. These factors are impacting order volumes, business confidence, and thus plans for expansion and upgrading of facilities.”

There remained opportunities for investors, with the UK’s manufacturing and assembly sector highlighted as a potential growth area.

“Advancements in technology, coupled with a diminishing cost advantage for offshore manufacturing (due to rising shipping and overseas labour costs), as well as a desire for greater sustainability and a need for supply chain resilience, are enabling and encouraging a reshoring of component manufacturing. This presents opportunity for UK’s manufacturing and assembly sector to expand, and with manufacturers moving away from a “just in time” supply model towards more of a “just in case” model, there is an increased need to hold more stock.”

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Trillions of dollars poured into Saudi real estate projects

The first of two global pieces of content to feature in our top five assesses the role that real estate is playing in Saudi Arabia’s Vision 2030.

There is huge demand for luxury property in Saudi Arabia, with close to 30% of homeowners in Saudi prepared to spend upwards of US$ 800,000 on a second home in the Kingdom.

As part of the ambitious Vision 2030, an entire new city called NEOM is being built in the Saudi desert. The city looks to embrace sustainability and include a number of automated services for its residents.

Away from Neom, Riyadh is highlighted as one of the crucial parts of Vision 2030 with huge investment into real estate and infrastructure predicted to enter the city.

Faisal Durrani, head of Middle East research, looks at the scale of investment and what it could mean for the country.

“Riyadh itself is poised to undergo explosive growth, with the population projected to close in on 17 million by 2030, up from around 7.5 million today.

“To meet this ambitious growth target, the city has itself seen real estate projects worth US$ 104 billion unveiled over the last six years. There are for a a new international airport worth US$ 147 billion, details of which are expected soon.

“The new international airport accounts for close to 74% of the US$ 200 billion nationwide infrastructure spend.

“Sustainability is a key theme for Riyadh too, citing recent plans for the 10 square kilometre ALNAMA Smart City, which will be the capital’s first zero-carbon city, housing some 44,000 people when completed.”

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Brexit Britain: tax concerns still weigh on investor sentiment

Completing our top five, making a reappearance with something of a comeback this two-year old article steals the last place as investors look for post-Brexit insight.

Despite this article being two years old, it shows that the implications arising for real estate investors as a result of Brexit are still relevant.

Kate Everett-Allen, head of international residential research, spoke with Caroline Cohen of The French Law Practice, one of the leading French law firms in London, who answered key questions around changes to the tax landscape and how property could be impacted.

The article looks at price growth in the previous decade and how likely it is to be impacted in 2021 following the withdrawal of the UK from Europe.

“Mainstream prices nationally have seen only moderate growth in the last decade, up 15% in the ten years to Q3 2020 according to INSEE, the French National Statistics Office. Although prime price growth has outpaced mainstream markets none have registered double-digit annual price growth since the financial crisis, limiting the scope for significant capital gain.”

It also explores the rule changes that came into effect at the beginning of 2021.

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