Spring 2023 – what’s in and what’s out in the h...

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15 April 2023

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Spring 2023 – what’s in and what’s out in the housing market

THE PROPERTY market continues to hold pretty firm - despite fears voiced by many that 2023 would herald a crash in prices.

In fact, one recent report indicated a large proportion of the anticipated declines in the housing market may already be well behind us.

According to analysis by Strutt & Parker, the last quarter of 2022 bore the brunt and is maintaining its previous house price forecasts of between -5% and 0% growth for the UK and -3% to 3% for prime central London for 2023.

And I think all the signs point towards continued resilience in the second quarter of 2023. But estate agents must be prepared to face a new reality – homes will take longer to sell, offers will be lower, vendor expectations must be managed, fall throughs will increase. In short, it’s going to be more work for – if we’re lucky – the same income.

But it’s a mixed picture. As such, we’ll likely witness increased stability and certainty in the some markets encouraging transactions through the second quarter of the year.

Here are some of the things we can expect to see in this second quarter:

Buy to Let: Fewer sales to landlords and many ‘Mom and Pop’ owners quitting the market.

Homes closer to stations are back in demand: Return to commuting has seen railway/well connected property back in demand. Flats are back on the shopping list and city centres have seen a mini-resurgence.

Oil’s out: The pressure on oil prices has eased but is set to rise again. Off-grid heating is putting many off.

Race for space is over: More country and seaside property is back on market. Staycations (remember those) are not what they were as people travel further afield for holidays. Rental rates have dropped and some councils have increased the levy on second homes meaning many aren’t financially viable now.

Home gym and home office space less in demand: This is linked to the fact so many spaces re-opened. Garden bars, hot tubs and home gyms aren’t the attraction they were.

EPC: The EPC rating matters more than ever to buyers. Until recently generally ignored, now a good EPC rating saves a lot of money year after year – something many will pay more for.

Cladding: There’s been a gradual softening in the avoidance to buy in larger blocks with potential cladding issues. With ideas to solve the crisis finally on the table, buyers are once again looking at them.

Fewer new builds: As Help2Buy closed and builders slowing construction, we will see developers opt to build fewer houses they can’t sell. Many non-prime sites are being mothballed.

Buyers are less tolerant of minor defects: These were often ignored when prices were rising but now surveyors are scrutinising, suggesting additional reports to investigate issues and down valuing when in doubt. Buyers will no longer accept defects believing the price will simply go up if they don’t.

Mortgages: They will remain less affordable than they were and this will not change any time soon. However, it is still the intention of many people to buy regardless so the gap is being bridged by keen sellers taking lower offers.

Some estate agents will shut: Poorly performing branches will close and estate agents not willing to work much, much harder to make a sale will find themselves jobless. Many agents close to retirement will bow out and others will leave the sector.

The Bank of Mum and Dad to tighten lending: When parents see the value of property dropping they are less inclined to lend a deposit to their offspring. Many who look to using equity release or a new mortgage to fund their kids will be put off by higher rates and tighter lending criteria.

JONATHANROLANDE.CO.UK

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- Jon Moreton
- 16 April 2023 09:37 AM
I have not expected a 'crash' in property prices, but I think they will fall throughout the rest of this year and 2024, ending up at least 15% below their peak on average. Mortgage costs will remain elevated, the cost of living crisis will drag on, unemployment will rise and FTBS will remain thin on the ground, all leading to a progressive downward trend in prices as sellers attune to reality. Supply constraints should prevent a crash, but not a downward drift.

- Jon Moreton
- 16 April 2023 09:39 AM
I have not expected a 'crash' in property prices, but I think they will fall throughout the rest of this year and 2024, ending up at least 15% below their peak on average. Mortgage costs will remain elevated, the cost of living crisis will drag on, unemployment will rise and FTBS will remain thin on the ground, all leading to a progressive downward trend in prices as sellers attune to reality. Supply constraints should prevent a crash, but not a downward drift.