January Property Market Update
Lou Fletcher from Piccolo Sales and Lettings in Salisbury provides our January Property Market Update. She gives us her housing market predictions – what is likely to happen to house prices in 2023? Should people sell this year?
House prices are on the turn
“In the last few months of 2022, both Halifax and Nationwide reported falling house prices and the latest data from the Land Registry also suggests that house prices are on the turn. This has led some commentators to predict that house prices will crash (fall by 20% or more) in the coming year but are things all doom and gloom?
“Everything that is going on at the moment has to be seen in the context of housing activity over the past few years.
“Things are most likely going to get worse before they get better but the good news is that we are in better shape and on a firmer footing than we were before both the early 1990s recession and the Global Financial Crisis.
“We think that house prices may fall by between 8% and 10% next year, which would take them back to levels last seen in March 2021, and around 7% or £16,000 higher than they were at the start of the COVID-19 pandemic. This is not a house price crash. It is much more likely that the number of homes sold in 2023 will fall further than the prices of those homes.
Deposits underpin house prices
“Deposits underpin house prices and drive housing transactions and are therefore the key to house prices. One of the main issues facing the market is access to deposits; for those with access to large deposits the housing market remains affordable, but those without are finding themselves shut out.
“Despite our national obsession with Rightmove, fewer and fewer people are actually moving home. Even though the COVID-19 stamp duty holiday fuelled the housing market, housing transactions have yet to return to their pre-Global Financial Crisis levels.
“The change in moving patterns reflects mortgage lending practices and house prices and their impact on necessary and aspirational moves. 1 in 3 moves are necessary / needs based, i.e. people having to move because of a change in their personal circumstances.
“Although mortgage rates have increased, it is important to look at this in the context of historically low interest rates. The average mortgage rate over the past 50 years is 7.6% and so the current rates are still arguably ‘below average’.
The overall economy is key
“The outlook for 2023 will depend on how the broader economy performs but this will be underpinned by low housing supply, high levels of housing equity and a high proportion of fixed-rate mortgages.
“Lengthy transaction times, partly caused by long chains, will continue to act as a drag on the market, making cash buyers who can make the move quickly the preferred buyer for 2023.
“Inevitably the longer the transaction time, the greater the chance of a fall-through so we will see a greater emphasis on collating ‘material information’ upfront to lessen the chance of sales falling through. The more information that can be provided up front to prospective buyers the better. This gives the agent a chance to resolve any issues before going to market, will ensure that all parties have the facts and transparency to make informed decisions and make it less likely for buyers to withdraw from transactions later down the line or apply to a lender who will decline their application because the property does not meet their lending criteria.
“The continued change to regulations in the rental sector and the erosion of tax advantages to landlords could herald good news for first time buyers. Traditionally, buy-to-let properties are the same type of properties that appeal to first time buyers and we are certainly seeing many private landlords selling their investments and exiting the private rental sector.
“Finally, house values next year will feel much more dependent on other factors from the perfect location to high quality finishes, without the backdrop of unprecedented demand. 2023 will inevitably prove a very different housing market to 2022 but there will still be buyers who need to buy, and sellers who need to sell. Over the longer term, forecasts for growth remain positive.”
For expert advice on the property and local rental market or for further information on our January Property Market Update contact Piccolo Sales and Lettings. You can call on 01722 580059 or email via email@example.com.
Please note. While we take care in choosing local property partners to recommend to our clients, we cannot be held responsible for the service they provide.
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