Before I do anything, I would like to wish you all a belated happy New Year.
This month, as usual, I’m going to take a look at what’s in store for the housing market in 2023. So, what are all the experts saying? Normally, their predictions tend to cluster around a broadly similar figure, giving you a useful guide as to what to expect. But not this year. The only thing they can agree on is that the rising cost-of-living and higher mortgage rates will lead to falling prices, but they are a very long way from agreeing on how much. Estimates vary from a relatively modest 2% to the doom-sayers’ 12%. To add to the confusion, the first figures are now in from Rightmove for January and, yet again, they have confounded all expectations, with prices up 0.9%! It begs the question – does anyone really know what is going on?
To get any clarity, you first need to take a look at the fundamentals - rising inflation and mortgage rates are said to be the biggest threats to the housing market this year. Both are now heading downward and are likely to continue doing so throughout 2023. In addition, the supply of new properties, which has been an issue for some time, is likely to get worse rather than better, helping to underpin prices. And, amongst all the gloom, it has just been revealed that the economy grew in November when everyone expected it to contract.
However welcome that news might be, it is unlikely to be a boom year. The early signs are, though, that it will be a lot better than many expected. No doubt, there will still be some bumps along the road - consumer confidence has taken a serious hit and, although mortgages have come down, they are still far higher than people are used to.
In balance, therefore, it would be reasonable to assume the sales market will start the year slowly with reduced levels of transactions. But, if the economic outlook continues to improve, things could pick up and, towards the end of the year, it is possible prices could edge into positive territory.
The rental market is an entirely different proposition. Most experts agree that the gap between supply and demand will keep on growing and, when landlords’ rising mortgage costs are added into the mix, there will be considerable upward pressure on rents this year. To compound the issue, aspiring first-time buyers now have to prove to lenders they can cope with far higher monthly mortgage payments than previously, forcing many to remain in the rental market and increasing competition for any available properties.
It means, amidst the cost-of-living crisis, the main headwinds are likely to be tenants’ finances and stretched affordability. With Section 21 notices set to be abolished this year, landlords will need to select their tenants with even more care than usual and they will need a good agent to guide them through the process. So, before you let out a property, just give us a call and we can set you on the right path.
Well, I guess that‘s it from me. I’ll be back next month, same time, same place.
