The Housing Market in 2022 and Predictions for 2023
We thought we’d follow the tradition of all good television shows and review the housing market in 2022 and give predictions for 2023.
Review of 2022
To steal a sporting analogy 2022 was a year of two halves.
The first half was characterised by the continuation of the post covid lockdown property boom. Working from home becoming the norm for many buyers, which led many to want to move to property with more space.
This led to an imbalance between buyers and sellers, it was common to have 3 or 4 buyers willing to pay above the asking price for each property being sold. Interest rates remained near record lows, which allowed buyers to bid increasingly higher for property.
According to Nationwide Building Society annual UK house price growth peaked in July at 11% and average house prices had risen by almost £50,000 in two years.
In the second half of the year the house price growth slowed and started to drop. In December house annual house price growth stood at just 2.8%.
The drop in average prices was driven by the combination of high inflation, which the Bank of England is trying to get under control by increasing the interest base rate to 3.5% in December, and the turmoil created by the Truss government’s mini budget in September which spooked the finance markets and lead to mortgage lenders raising average mortgage rates well above 7%.
2023 Forecast
Economic headwinds, including high inflation, the cost-of-living crisis and widespread strikes are predicted to ease as we go through 2023.
There is data showing interest rates are coming down. According to Uswitch average two-year fixed rate mortgages have dropped to 5.59 % (based on a 75% LTV). There are two-year fixed rate mortgages available for home purchasers with a 60% LTV at 4.74%. Experts expect these rates to continue to fall in 2023.
The employment market continues to hold up, which helps prevent forced sales that can often be the shock that precipitates a price crash.
Thoughts from James Raspin, Chief Surveying Officer at Survey Hut
If interest rates continue to fall and the cost-of-living crises eases buyer confidence should improve and filter through to increased demand and a stabilisation of house prices.
We should hopefully avoid mass unemployment which will avoid the need for forced sales.
We predict a further price drop of less than 3% across 2023, which should be put in context and compared to the steep increases seen over the past three years.
Survey Hut specialise in home surveys and valuations. Get in contact.
