As we move towards the end of another year we’ll consider a few possible trends in the property market next year .... focussing on issues that buyers, sellers and agents might need to bear in mind.
You can also read the Latest Property Price Forecasts For 2023 here.
There will be fewer moves
It’s pretty much guaranteed that there will be fewer house moves in 2023. As living and mortgage costs mean fewer buyers can afford to buy, or feel confident about doing so. And fewer sellers are interested in selling.
According to HM Land Registry the levels of current monthly property transactions have already returned to similar levels to those in late 2019.
There will be different reasons for moving
Buyers and sellers will have very different reasons for moving next year. Over the last few years moving for more space or a new lifestyle have been predominant – reasons which are largely a matter of choice rather than necessity.
In 2023 buyers and sellers who move are more likely to be those who do so because they have to. For example, those moving for work, or due to divorce, advancing age or bereavement. It will be these buyers who form the core of the market over the next couple of years.
The mid market is likely to suffer most
It’s hard to see why there shouldn’t still be good demand for smaller, cheaper houses that more people can afford to buy and run .... and which still could be attractive to investors. The very high end market, where buyers are unaffected by mortgage rates and utility costs could continue ticking along too.
The mid market is most likely to come under pressure however – the kind of properties which typical buyers have always stretched themselves to buy and run.
Buyers will be more price conscious
Ultra-low mortgage rates over the last few years have meant that paying an extra £20,000, £50,000 or even £100,000 more than you anticipated doesn’t add that much to monthly repayments. But buyers considering paying more will find that higher mortgage rates have an exponential impact on what they have to find each month.
So keen pricing will become more important than ever for buyers and sellers. Buyers will be drawn to the most keenly priced properties. And in a less competitive market they may make lower offers.
There will be more interest in properties with potential
Buyers will be looking for properties that they can move into now and ‘do up’ later, as finances allow. Or properties that have room to extend as their family grows in future.
Unless the price is ultra-competitive it’s likely that not too many buyers will be in the market for the fully-finished ‘dream house’ at a premium price. That could be a problem for new build developers, but benefit existing homeowners and the agents who sell them.
Investors will still be active (and possibly more so), but will be more selective
Much has been said about the death of the buy to let market. But it’s still possible to find properties where the numbers still add up for buy to let, and where it’s possible to make a good return. If, as seems likely, prices fall and rents rise this could even invigorate the buy to let market to some extent too.
It’s likely that, rather than just buying anything to let as in the past, investors will be more professional and selective. They will want to carefully analyse prices, rents and returns. Issues like EPCs and energy efficiency will be more important to them too.
There could be more overseas buyers
Buyers from many countries around the world still see the UK as a good place to buy property. Any weakness in the pound makes it even more attractive. And many of these buyers are cash rich and not impacted by rising interest rates.
Not every area of the country will attract overseas buyers. But it’s possible more could be attracted to buy away from the obvious overseas-buyer haunts like London.
There could be longer chains, and maybe more fall-throughs
It seems inevitable that it will take longer from a house going on the market, to finding a buyer, to completing the sale. Buyers are likely to be less motivated – less so if they think they can get a better deal by waiting. Mortgage offers could be harder to come by. Further rises in interest rates/taxation could cause some buyers to back out.
It’s unlikely that offers will be made and accepted within days of a property going on the market as in recent times. The average time for a house sale to go through could rise from the current three months or so to six months or so – something that was by no means unusual in cooler property markets in the past.
At the end of the day however ....
The property market will keep on turning round. Just like it did in the cool property markets in the early 1990s and the post-2008 financial crisis period. But the property market will most likely be very different in 2023. Property will still be bought and still be sold. But progressing a sale will be more of a marathon than the sprint it has been over the last few years.