UK Property Predictions For 2023 –
Where Is The Housing And Rental Market Going?
With some
forecasters warning of somewhere between a depression and Armageddon, here are
my thoughts on the UK housing market.
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The UK housing
market will shrink - but not necessarily crash - next year, industry experts agree,
as the government fights recession and higher mortgage rates.
House prices have been
dropping month-on-month with average prices down 2.3% in November from
October – the most since the start of the financial crash in 2008 – according
to Halifax.
Price growth will
decline in 2023 as soaring inflation hits the economy and forces interest rates
up.
As the downturn intensifies,
housing indicators are showing red with rates expected to go even higher and
the UK goes into a long recession.
The Bank of England
is expected to raise interest rates into 2023 from 3.5% now to 4.75%, but there
are signs that the rate of inflation is slowing.
Higher interest
rates will hit buy-to-let landlords and investors, as deals fail to stack up.
Move from cities to
the country is slowing, as more people move back to the office.
Property experts forecast
property price declines of 5% - 12% next year, although some warn of a crash by
15% to 20%.
Mortgage rates have
since fallen back since the disastrous mini-budget in September to an
average five-year fix at 5.6% according to Moneyfacts – still far higher than a
year ago.
UK mortgage lenders
expect to lend 23% less to homebuyers in 2023 following a two-year boom.
Leading UK lenders have
met with government officials to discuss measures to ease the burden on around 90,000
people in mortgage arrears, the FT reports.
Property sales
are set to drop to 1.01m next year from 1.27m in 2022.
Savills warns of a severe
drop in transactions, to 870,000, and a 10% fall in house prices in 2023.
Estate agents Jones
Lang LaSalle forecasts a 6% drop in house prices next year.
Both firms expect a
1% price growth in 2024, as interest rates fall back and inflation cools.
The Nationwide
expects a “modest decline” or “soft landing” in house prices next year, but
lenders seldom talk of a property crash. The lender said 85% of mortgage
balances are currently on fixed interest rates.
The Bank of England
said 4m households face higher mortgage payments next year.
Typical payments
could rise by £250 to £1,000 a month causing severe financial difficulties for
220,000 households.
Capital Economics’
central forecast is for house prices to fall by 12% by the end of 2023, but
Andrew Wishart, senior economist at the consultancy, said in a worst-case
scenario prices could plummet by up to 20%. “The initial drop in house prices
has been sharper than in the financial crisis or the early 90s, “For
affordability to return to a sustainable level by the end of 2023, when we
think mortgage rates will still be around 5%, the average house price would
have to drop by 20%.
On the other hand,
were market and mortgage interest rates to drop faster than we expect, that
would limit the fall in prices.”
Rent prices have
surged to record levels due to a shortage of properties to rent and growing demand,
as well as a slowing buy-to-let market and many first-time buyers are opting to
rent in the hope of lower mortgage rates in 2023/24. Some 85,000
landlords have quit the buy-to-let market in the last 5 years.
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UK private rents jumped
by 4% in November, the highest since records began in 2016, official figures
showed.
Savills forecasts
rental growth rising to 6.5% before slowing to 4% in 2024.
Globally, many
markets seem overheated and, in a bubble, – Sydney and Auckland for instance.
China’s property
market boom appears to be over with a 20% decline.
In my next episode,
I will be talking to one of Toronto’s leading realtors about his housing predictions
for 2023.
As with all
economic forecasts, much depends on government action and the prevailing winds
of the economy, but more rests on your action in your U’conomy!
Your goals for
2023
·
How was 2022 for you?
·
Did you achieve your goals?
·
What are your financial goals for 2023 and how
do you plan to achieve them?
I wish you a happy
and successful new year!
For more tips and
money-making ideas and coaching see Master Your Money the S.M.A.R.T Way training.
Check it out for
free - https://bit.ly/3isugCr.
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