2023’s housing market will be ‘calmer’

2023’s housing market will be ‘calmer’

0:01 AM, 10th January 2023, About A year ago

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2023’s housing market will be a lot calmer than has been seen in the last two years because the economic downturn has hit both demand and sales, one leading real expert says.

The managing director of Fine & Country, Nicky Stevenson, says that property trends appear to be heading back to those last seen in 2019 – and the so-called ‘race for space’ which has dominated both sales and lettings in recent times has now come to an end.

She says: “London returned to its top spot as the most searched-for location in 2022, and while levels of new buyer demand faltered as 2022 drew to a close, in affordable and accessible urban areas demand is firm.

“UK price growth remains in positive territory, however, Nationwide report the annual rate of growth fell for the fourth consecutive month in December 2022, to 2.8%, with month-on-month prices dropping by 0.1%.”

Price growth in the prime market remains positive in all regions

Ms Stevenson points out that across England and Wales annual price growth in the prime market remains positive in all regions, but a North/South split is now starting to appear.

She adds: “Annual price growth has moderated significantly across the North and the Midlands, while annual price growth in prime markets across the South and London is currently stronger.”

It now appears that 2023 will be a buyer’s market but they will be more cautious and wary about asking prices.

Ms Stevenson said: “Realistic pricing from sellers for market conditions will be crucial to achieving a sale.

“Rightmove reported that at 2.1%, the fall in newly-listed prices in December was higher than usual, and Zoopla report that the proportion of properties selling with a price reduction is on the rise.

“With less competition in the market, the time taken to sell a property is edging upwards in all regions except London.”

Mortgage and household costs impacting the sector

The other big issue affecting the housing market is affordability with mortgage and household costs impacting the sector this year.

Ms Stevenson points to UK Finance anticipating that house purchase numbers will fall by 21% to just over 1 million, while lending by banks and building societies will return to pre-Covid levels.

She adds: “Mortgage rates for home movers start 2023 lower than in recent months, with a number of fixed-rate deals below 5% available for those looking for a loan-to-value below 75%.

“However, fluctuations in the Standard Variable Rate are still evident, the Bank of England having raised the base rate to 3.5% in December.

“Latest forecasts from HM Treasury indicate the official bank rate will be 4.3% during the final quarter of 2023.

“Rates for first-time buyers remain at over 5%, based on a 90% loan-to-value, with research by the Yorkshire Building Society indicating that there was a 9% fall in first-time buyer numbers year-on-year in 2022.”

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