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What’s in store for the property market in 2023?

almost 2 years ago
What’s in store for the property market in 2023?

Following the lifting of Covid restrictions in 2020, the local and national property market boomed with more buyers than stock available, driving the prices up. This combined with stamp duty holiday and extremely borrowing, created the perfect storm for huge capital growth in residential property. As we fast forward two years on, the war in Ukraine and global inflation has caused central banks around the work to try to tackle inflation. These changes mean we have seen on of the strongest sellers’ markets in history change to a buyers market in weeks.

As of December 2022, interest rates are still historically low at 3.5%. The market had originally anticipated higher rate rises of circa 6% but this has now been re-adjusted to be likely under the 4%. The re-adjustment is due to the increased confidence amongst investors in the Sunak government.

Knight Frank and other reputable research desks have predicted a fall in property prices in 2023 of circa 5%. However, they did also predict a fall in property prices following the covid outbreak and yet we saw property prices surge by double digits around the globe! Let’s be clear, none of us have a crystal ball to look in to the future but many research desks have been wrong before and we believe may have called it wrong again.

Mortgage rates are now a lot higher than they were last year and the concern in the media is that a lot of people will not be able to afford to re-mortgage their houses next year and we will see something similar to what happened in 2008. However, things are very difference this time and here is why…

Banks have not given out 100-110% mortgages as previously therefore people have equity in their property. Mortgages have been stress tested at higher rates, similar to the current rates. So providing mortgage rates (not interest rates) do not rise beyond the 5-6% level, home owners will still be able to afford their mortgages. Granted, they will have a lot less disposable income. The fancy car on finance may have to be traded for something more humble, the expensive holiday might not happen but I would imagine the vast majority would sacrifice those things in order to keep their home.  Something else to consider, is this time around, we have a very tight job market with very low levels or unemployment and this is not expected to change.

 

So what is happening right now in the local property market? 

Rightmove forecast that property prices could drop by up to and overall average 2% next year. As a multispeed hyper local market emerges, with some locations property types and sectors fairing much better than others. We expect Beckenham and some of the surrounding areas to continue to fare well due to its excellent mix of schools, transport, opens spaces and amenities.

The number of views of homes for sale on Rightmove is up 11% compared to this time last year. A sign that there are many potential viewers monitoring the market in details and weighing up their options. As mortgage rates settles down, buyer demand over the past two weeks is up 4% on the same period in 2019. We predict the market will settle in to a more normal pre-pandemic level of activity as 2023 progresses. Ultimately, we see people needing to move for a variety of reasons: schools, divorce and bereavements are a few.

If you are thinking of moving in 2023 please contact us to discuss how best to move forward.

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