The housing market has been subject to a year like no other – starting 2022 on the back of months of record-breaking increases in house prices, astronomic demand, and properties selling more rapidly than ever before.
But the soaring cost of living, burgeoning inflation and the subsequent raising of interest rates in order to temper rampant rising prices and diminished spending power saw the return of a housing market akin to the kind we had seen in the years pre-pandemic.
The Bank of England was forced to raise interest rates for the ninth time since last December on Thursday – this time to 3.5 per cent.
But how could the events of this year affect the property market in 2023? We answer the key questions:
What will happen to house prices next year?
According to Rightmove, housing prices in the UK increase by 5.6 per cent his year to an average of £359,137 – almost £17,000 higher than in 2021, when prices rose by 6.3 per cent.
The property website now forecasts that in 2023 average asking prices will drop by 2 per cent, which means prices will still remain higher than they were after the home-moving rush of 2021.
It says one of the key drivers of house price growth over the past two years has been “the imbalance of supply and demand, with far more people looking to move than there were homes available for sale.”
In more settled circumstances, prospective buyers would have more time and space to ensure they can scout out the right home to suit their needs.
As a result, Rightmove anticipates the time it takes to sell a home increasing around 60 days – a time frame it would expect to see in a more “normal” housing market.
Rightmove property expert Tim Bannister said: “After two and a half years of frenetic activity, it’s easy to forget that having multiple bidders immediately lining up to buy your home was the exception rather than the norm in pre-pandemic years, and there will be a period of readjustment for home-movers as properties take longer to find the right buyer.”
How will this impact your area?
Rightmove bases its forecasting on a national average, and therefore expects prices in certain regions to outstrip those in other localities.
This is, of course, down to the fact that changes in house prices differ across the country due to smaller, local markets affected in different ways by national circumstance.
“For instance, price growth in an area could vary from street to street depending on the types of property available, the desirability of the location, and buyer affordability,” Rightmove explains.
To find out more about average asking prices where you live, visit Rightmove’s December House Price Report.
Are people looking to get started with home moves?
Despite the financial uncertainty casting a dark cloud over much of the UK economy, Rightmove says it has begun to notice signs that some buyers looking to home moves as we head into the New Year.
The property site said views of homes for sale on Rightmove are up 11 per cent when compared to the same period in 2021, suggesting that moving in 2023 is a possibility for those who are able to do so.
Mr Bannister says: “We’re heading towards a more even balance between supply and demand next year, but we don’t expect more significant price falls in 2023. This is reflected in our prediction of a relatively modest average fall of 2 per cent next year.”
What do estate agents have to say?
Guy Gittins, CEO at Foxtons, says: “2022 has certainly been a year of two halves. We started the year still riding the wave of momentum from peoples’ changing requirements following Covid. As interest rates started to increase the market in London paused to catch its breath, and in the weeks that followed, we saw buyer demand fall sharply.”
“However, there seemed to be a strong number of buyers who had factored higher rates into their budget and were still determined to transact,” he adds.
Rob Kennedy, Director at Philip James Kennedy in Didsbury, says: “The month of December is a good market barometer as we register the most proactive buyers who are planning on moving in early 2023. Whilst there are less viewings and new instructions in December, we encourage as many new sellers as possible to launch their properties mid-December, as they enjoy high levels of internet activity with clients watching video tours and considering moving over the festive period.”
“This culminates in one of the most popular property search days of all which is Boxing Day, where you definitely want your property to have a presence. These are the properties that will attract the first wave of viewing activity in January and sell first.”
