As you plan for the year to come, it’s well worth looking back at the year just gone to help understand today’s market. From property prices to the availability of high net worth (HNW) finance, here’s our round-up of 2021’s key events and stories.
Property prices in the UK: 2021 in review
Looking at the UK market as a whole, the story of 2021 pricing is positive: According to Forbes, ‘the price of a typical British home rose by 10.4% in the last 12 months’, making 2021 ‘the strongest calendar year for UK house price growth since 2006’. Other data shows that a shortage of available properties and competition amongst mortgage lenders is driving growth, with some also suggesting up to a 10% annual rise in house prices.
In the latter half of 2021, there was a widely reported ‘return of the super–rich’ to London’s property market. This, in combination with the easing of lockdown restrictions, contributed to surging house prices in the most expensive parts of the capital.
This chimes with our experience at Articus Finance: we assisted a great many clients in the second half of the year with purchasing dream properties or standout investment assets across London, many of whom had a hard battle on their hands to secure the sale in the first place, given that demand seemingly outstripped supply.
In terms of price growth, the figures for prime property aren’t astonishing – but they have certainly been more positive than many expected. Knight Frank, for example, reported that average prices rose 1.2% in the year to October – with September marking ‘the sixth consecutive month of annual growth in Prime Central London (PCL), something last achieved before the Brexit referendum in 2016.’ Knight Frank also notes that growth was strong in prime outer London.
The international property market
Amidst a changing regulatory landscape across the globe, many of the world’s high net worth (HNW) individuals are seeking citizenships in countries other than their own – and many countries are touting for investment with schemes that encourage such movement.
This has unsurprisingly had an impact on the HNW locations that have performed well throughout 2021. Barbados, for example, sought to attract entrepreneurs with a 12-month digital nomad visa scheme – while St. Kitts and Nevis lowered the required sum for investment for its Citizenship-by-Investment Program. Elsewhere, greater political stability has led to positive sentiment for investment: the U.S. has performed well, particularly post the transfer of the Presidency.
Despite being a hugely popular area from a lifestyle perspective, the French Riviera market has failed to demonstrate price growth throughout 2021: in fact, many properties have sold for significantly lower than their list price, with long-term investors speculating that the market is on a long-term downward pricing trend.
That said, we have seen some clients secure excellent bargains on luxury properties that have been on the market for a while – particularly handy if you’re looking for a property to use from a lifestyle perspective, rather than hoping to make capital gains over the next decade. We’ve also supported clients looking to refinance property in the Riviera to lock in low rates of borrowing.
Inflation mounted – but mortgage rates stayed low
Inflation was a significant source of concern for both the general public and the Bank of England throughout 2021. In August, we saw the largest ever increase in the CPI 12-month inflation rate, and the latest available data shows that this trend is only continuing.
But to the surprise of some, the Bank of England maintained the base rate at 0.1% for virtually the entire year, before finally raising the base rate to 0.25% in December. Accordingly, mortgage rates have stayed very low throughout the year, which has meant widespread access to very cheap borrowing for investors, home-buyers and those refinancing a property alike.
We do expect to see the base rate creep up over the next year, so understandably, many took the opportunity to fix in a long-term product now, rather than expose themselves to rising costs. This has been a significant theme of the last few months, and one we expect to continue into 2022.
Client profiles: who we helped in 2021
In terms of who we supported throughout 2021, the answer is incredibly varied. As in 2020, we helped numerous clients buy larger properties with more outside space in response to the pandemic. We demonstrated one of our core strengths – arranging finance for expats and foreign nationals – and helped investors around the world with their UK property requirements, be that a purchase or refinancing. We also assisted clients with requirements in key HNW locations around the world, including France, Switzerland, Spain, Portugal, Cayman Islands and the USA
Along with more conventional cases, we utilised our vast network of private and niche lenders to secure mortgages for those with complicated backgrounds or inconsistent income. We also successfully supported several clients with a requirement for Sharia finance, whether that be for their main residence or Islamic finance for a buy to let.
And of course, with interest rates expected to continue rising next year, we helped a number of clients secure fixed rate mortgages, both on residential properties, buy to lets and commercial and development projects.
We also worked with a small but growing number of clients seeking to leverage assets such as stock portfolios, boats and other luxury assets. This is something we’re more than capable of assisting with, so do speak to an Articus broker if you’d like more information. Finally, we’re working on a rapidly growing number of commercial and development deals, and we expect to see this grow further next year.
The year to come
2021 was an undeniably challenging year for many across the world. But with a new year begun, there’s plenty of optimism in the air – and we look forward to supporting our clients with your plans, no matter where you’re based in the world.
Want to read more about what 2022 holds for property and property finance? Head to our look at the year ahead.
