Many market experts have predicted that the UK property boom is all set to end in 2023. Estate agents in Doncaster have claimed that property prices in the UK have fallen for the first time in 15 months. Since the Covid-19 pandemic and the introduction of the stamp duty holiday, along with a few other government schemes to help boost the UK property market, house prices in the UK have been rising every month. However, many experts are claiming that property prices in the UK could fall by 5 per cent in 2023, which could mean good news for potential buyers. This brings us to the biggest question on everyone’s mind, how will the UK property prices impact potential home buyers in 2023?
Fall in property prices
As per the House Price Index by Nationwide, in October 2022, the average price of a house in the UK was around £268,282 which is a fall from September’s numbers. In September, the average price of property in the UK was £272,259. This fall in property prices in a month has been the first price drop that the UK property market has seen since July 2021, and it is supposed to be the biggest price decrease since June 2022. As per a report from Zoopla, the average property price in the UK could drop by a whopping 5 per cent by 2023. This drop in property prices will essentially be the undoing of the average rise in UK property prices over the past 8 months.
Impact on home buyers: For home buyers, a fall in property prices is great news. Many potential buyers who have been putting off buying a new home in the past few months will finally have a chance to climb onto the property ladder and invest in the UK property market. However, whether prices will continue to fall or average property prices in the UK will increase after 2023 is uncertain. Some experts do believe that this predicted fall in property prices in 2023 is just a sharp correction and that the property market will continue to grow in the future.
Inflation and interest rates
This week, the average two-year fixed mortgage rate in the UK reached 6.46 per cent while the average five-year fixed mortgage rate jumped to 6.32 per cent. According to experts, this is the highest increase in mortgage rates since the financial crisis of 2008. The inflation rate in the UK reached a record high of 10.1 per cent in September 2022! Essentially, it is this combination of rising interest rates coupled with the high rate of inflation that has reduced buyer affordability. This has led to a massive decrease in market activity, as very few people are able to secure a mortgage.
Impact on home buyers: An increase in the rate of inflation directly means an increase in the cost of living. With the price of utility bills, energy bills and gas bills increasing too, hence adding to the cost of living, it might not be the best time to invest in the property market; unless you have your finances in order, of course. Also, the increase in mortgage rates coupled with the strict mortgage criteria could make it hard for potential buyers to secure a good mortgage.
Demand and supply
Since it is predicted that the UK property market will not be cohesive for sellers or buyers in 2023, we expect to see a fall in demand and supply. Basically, since the prices of properties are expected to fall, many sellers will either have to reduce their selling prices drastically or they will be forced to take their properties off the market. With that being said, the demand for properties in the UK in 2023 will definitely be less due to the rising rate of inflation coupled with the high mortgage rates. So, while the low demand will certainly slow down the property market, the combination of a lack of supply as well as a lack of demand will drive down the average price of property in the UK in 2023.
Impact on home buyers: While the demand and supply in the UK property market may be low, experts believe that serious buyers and sellers will still enter the market. This could mean quick negotiations and higher chances of closing a deal. With that being said, entering the UK property market in 2023 will be a good idea for buyers and sellers, but it is highly recommended that these buyers and sellers hire an estate agent who can help them navigate the market
Also Know About: All News Magazine