Chestertons: Drop in sales more likely than decline in prices

Chestertons has released its housing market forecasts for 2023, predicting that prices will only see a “slight dip” next year before bouncing back in 2024.

The historic agency suggests fewer than expected forced sales and continued demand will cushion prices.

It is predicting that prices across England and Wales will drop by around 1% in 2023, compared with a decline of 3.2% in London. 

The capital will then lead the recovery in 2024, with prices rebounding by 9%, compared with a smaller increase nationally, Chestertons said.

The agency said it expects that many homeowners will adopt a “wait-and-see” approach for the first half of 2023, which will reduce the number of property sales that take place.
 

It is anticipated that this lack of activity will cause a high degree of “buyer frustration” in the second half of the year which, when released, will support the rapid price growth they expect in 2024.

Sebastian Verity, head of research for Chestertons, said: “We expect 2023 to be characterised by a slower property market during which around 25% fewer properties will come onto the market and change hands compared with a ‘normal’ year. 

“The Government is actively working with mortgage lenders to avoid additional stress on borrowers so we believe the number of forced sales will be relatively small and the lack of supply, combined with the strong underlying demand for homes, will ultimately insulate the market from any dramatic falls in prices.”

Matthew Thompson, head of sales at Chestertons, added: “We are already seeing signs of supply tightening across the London property market, with a 30% drop in the number of people requesting valuations of their properties in the last three months of 2022. 

“As supply and activity continue to fall going into 2023, we believe this should counteract the majority of the downward pressure on house prices.”

Meanwhile, Chestertons expects that London’s prime property market will outperform the mainstream market for the next 18 months due to its status as a relatively safe asset and its continued appeal to international investors. 

It is predicting prices in this segment to rise by 5.7% in 2023 and a further 3.5% in 2024.