What does 2023 hold for the UK property market?
What will 2023 hold for the British property market? That’s a perfectly valid question. It’s difficult to accurately predict, in all honesty, because the factors are constantly changing.
However, I’ve written the following article based on what we currently expect to happen over the next few months. Things can change – they always do. Keeping on top of recent developments is the best way to understand what’s likely to happen in the market in your local area.
I’ve worked in the property market for years, conducting home surveys for interested buyers.
Here are my thoughts. I hope you find them helpful and encouraging.
What’s the context? What’s the current state of the market?
Broadly, property has outperformed most other markets throughout the past two or three years. While COVID and Brexit hit other industries hard, they also drove homebuyers, as the Government provided incentives like the Stamp Duty Holiday.
At the time of writing, the market is at a pivot point. House price growth has slowed, and values even dropped slightly over the last couple of months. Buyer demand has finally started reducing, and everything is teetering to an uncertain position.
Of course, we’ll all be well aware of the cost-of-living crisis. Increased energy bills, fuel costs, food prices, mortgage rates, and more are all having a profound effect on the market. Everything has continued to escalate, which is why we find ourselves in the current property market situation.
What factors impact the property market?
As with any industry, the property market is impacted by all sorts of factors, including the general state of the economy. (And, let’s be honest, that’s not doing too well right now.)
I’ve already mentioned the cost-of-living crisis, which is undeniably the main reason for the slowdown in the property market. Property is impacted by energy bills, legal fees, Government taxes, location and desirability, and so on.
In general terms, the industry works just the same as any other. The greater the demand for the product (homes), the more they’re worth. And they’re worth what people are willing to pay for them. On paper, it’s simple. In real life, not so much.
What do I expect to happen in 2023?
Most banks, analysts and mortgage providers expect a drop in house prices next year. To my mind, the most sensible estimates are between 5% and 10%. For example, Lloyds predicts an 8% drop across the UK average.
I expect the average British home value to remain reasonably consistent across next year and into 2024. This would reflect the uncertainty in the market. I’m not expecting to see everyone avoid home purchases (which would lead to a price drop). Equally, it doesn’t seem likely that people will be flocking to buy homes with a recession looming.
Having said all that, different areas will perform differently. Certain places will be more desirable – others less so. I would expect some areas to increase in value while most decrease. In times of economic uncertainty, living in the city may become more desirable again. We will have to see.
Overall, no matter where you are in the UK, expect the average price to decrease. The market is certainly going to suffer to some extent, and it’s crucial for homeowners to prepare for a temporary period of financial hardship.
What does this mean for homebuyers?
Homebuyers moving from an existing owned home will find the costs are higher. This makes it difficult but far from impossible. The value of your current property will decrease, but so will the value of the building you purchase.
It’s first-time buyers who really have the opportunity to win here. Although mortgage rates might be scary, the price drop will allow more young people and renters to climb the ladder.
No matter your situation, taking precautions is vital. This isn’t the time to recklessly jump into a challenging economic circumstance. As the MD of GB Home Surveys, I’d strongly recommend hiring a chartered surveyor to inspect any home you’re interested in.
This mitigates the risk by spotting common problems and giving you a general overview of the building’s condition. You can then decide how to proceed and know whether the home (and the future running costs) fit in with your budget.
And while times are tough, we’re doing our bit by dropping our prices for a RICS Level Two Home Survey to make it as affordable as possible in the run-ip to Christmas.
I’d love to hear from you if you’re a potential homebuyer in the South West, West Midlands or South Wales. Why not reach out using the contact form at the bottom of this page?
Thanks for taking the time to read through this article. No matter what next year brings, keep your chin up. Things always right themselves eventually.
James Quinn AssocRICS
