Economic and property market review

September 2022


Economic data

Property market occupier data

Property market investment data


Economic trends

  • After the strong rebound for the UK economy in 2021, growth in 2022 has slowed in the face of rising inflation, the household incomes squeeze and geo-political events. Policymakers are taking steps that will inevitably slow growth, with the Bank of England hiking rates. UK GDP contracted q-on-q by -0.1% in Q2 2022, leaving the economy 0.6% above its pre-Covid level.
  • The spring and early summer has seen the economy move into a ‘stop, go’ pattern, with GDP expanding by 0.4% month-on-month in May, contracting by -0.6% in June, then returning to growth (0.2%) in July. In September, the Bank of England predicted the Q3 GDP figures would show the UK has entered a technical recession which will continue throughout next year.
  • The Covid risk has fallen significantly in the UK, but this has coincided with the war in Ukraine, which has caused volatility in commodity prices and increased pressure on supply chains. Evidence is building that the war is acting as a brake on growth in the UK.
  • CPI inflation eased slightly to 9.9% in the year to August 2022, which is down from July’s figure of 10.1% due to a fall in petrol prices. Nevertheless, inflation is expected to go higher in the coming months due to higher utility bills over the winter.
  • At the September meeting of the BoE’s Monetary Policy Committee (MPC) the decision was taken to increase the UK base rate by 50 bps to 2.25%. However, the US Federal Reserve has been hiking rates more aggressively and its policy rate is 3.25%. That the Bank of England is not matching the Fed’s rate of increase in interest rates has caused the pound to slide in value against the dollar this year.
  • The unemployment rate was 3.6%, which is below its pre-pandemic level of 4.0%. This indicates a tight labour market, and many firms report problems filling jobs.
  • The IHS Markit composite Purchasing Managers’ Index (PMI) for August recorded a net balance of 49.6, up from the 51.1 recorded in July. A reading of below 50.0 suggests an economic contraction may have occurred.
  • Gfk's consumer confidence index decreased to -44 in August, down from -41 in July, reflecting concerns over cost-of-living increases.

Property market

  • The government in late September held a ‘min-budget’ aimed at boosting growth. This cancelled a planned hike in corporation tax, reversed the increase in National Insurance last spring, and cut income tax and Stamp Duty Land Tax. The measures will add significantly to the government’s debt burden.
  • The first half of 2022 have seen mixed conditions in the commercial property market, as investment and leasing markets digested the changed macro-economic backdrop. Initial indicators and anecdotal evidence suggest investors and occupiers are adapting to the reality of rising rates but are still generally remaining active.
  • Rolling investment volumes across the UK in the year to July 2022 totalled £68.4 billion, which is down slightly on the June figure of £71.6 billion, but ahead of the long-term average of £58.3 billion.


  • Office rental value growth picked up in August, with the MSCI Market Rental Growth Index for offices rising by 0.14% in August, up from 0.11% in July. This might prove to be a short-lived improvement given the cooling macro-economic backdrop.
  • The MSCI Capital Value Growth Index for Offices decreased by -0.55% month-on-month in August 2022, which is down on the July figure of -0.29%. This marks the second negative figure since October 2021.


  • In August, UK retail footfall improved to +8.6% compared to 2021, according to Springboard. Compared to pre-pandemic levels, overall UK footfall was -13.2% which was better than anticipated.
  • Retail capital values lost momentum recently with the MSCI index falling contracting by -1.0% month-on-month in August, marking the second consecutive negative figure.


  • The Industrial market has had a strong run for some time now although there is clear evidence of deceleration in the figures. 12-month total returns stood at 27.7% in August 2022, down from April’s peak of 43.0%.
  • Investment volumes for industrial assets stood at £17.1 billion in the year to July 2022. This is down on the £18.2 billion recorded in the year to June 2022, but well above the £7.7 billion figure for the year to December 2019.


  • House price growth in the UK has remained strong in recent months, although there are signs of a modest deceleration in the figures. The Halifax House Price Index reported an 11.5% increase in the year to August, down slightly from the 11.8% figure for July.


  • A recent RICS survey found that issues like Ukraine, inflation and rising build costs are replacing Covid as the leading concerns for the market. Moreover, in the last couple of months a number of property market indicators have pointed to a moderate deceleration in activity.
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