Savills: New Year property market will shift to 'needs-based' buyers

‘Needs-based’ buyers will dominate the property market in the early part of 2023 while equity-rich lifestyle buyers will have their moment as the year progresses, Savills has predicted.

A survey by the agency brand asked buyers their reasons for moving.

It found that 41% of buyers wanted to downsize, 36% wanted to upsize and 23% were in the market because of a relationship breakdown or a bereavement, to reduce borrowing or because a change in employment necessitated a move.

Despite the increased uncertainty of recent months, the latest survey from Savills shows that buyer commitment has improved since the firm’s previous survey in August, when it hit its lowest point since the start of the pandemic.

Asked about their commitment to move, a net balance of +3% of all respondents said they were more committed to moving within the next three months and +12% over the next six months. 

This rises to +20% for those moving for work, +32% for those moving because of a bereavement and +39% for those looking to reduce levels of borrowing.  
The most committed group, with a net balance of +48%, are moving because of a relationship breakdown.
 

Some 77% of Savills agents surveyed said there has been a marked increase in the number of buyers coming through their doors looking to take advantage of expected lower house prices next year. 

The majority of Savills agents agreed that the value of home life is now more important than ever for their buyers. 

This is translating into buyers taking a longer-term view when searching for the perfect home. Fewer than one in 10 (9.7%) of buyers anticipate owning their next home for less than five years, while 60% expect to own for at least 10 years. 

A quarter of aspiring buyers are currently looking for their ‘forever’ home, with a 20+ year timeframe in mind.

Despite a return to offices and normal social routine, country living also remains popular. When asked what type of location is most attractive, the majority of aspiring buyers opted for small towns, villages and the countryside, over cities and their suburbs.

More than half of agents also agreed that somewhere to work from home is still a key priority for buyers.

Savills has forecast average falls of 6.5% across the UK prime regional markets next year, but a net 10% increase over the next five years, pointing to an opportunity for those less reliant on borrowing.

More debt-dependent first time buyers and mortgaged buy-to-let buyers are more likely to find themselves less able to transact until affordability improves, particularly until there is more certainty in the lending market, Savills says.

Frances McDonald, Savills residential research analyst, said: “A return to a more stable political and financial environment following the tumultuous ‘mini-Budget’ has led to a more positive outlook among potential buyers and sellers, despite the expectation of further economic uncertainty,” 

“While there are very clear headwinds, this survey suggests that there is a strong seam of demand in the market, but that it will be clearly split between those who need to move quickly and more discretionary buyers equally committed to moving but happy to bide their time over the next 12-24 months, to ensure that they get the right home at the right price.”