Prices could stay higher than pre-Covid levels
AHOUSING market cooldown is expected in 2023 but prices will remain higher than before the coronavirus pandemic started, experts have suggested.
Some new year stand-offs may also be seen between buyers and sellers as the market adjusts and sellers may need to be more patient as homes potentially take longer to sell. Halifax predicts UK house prices will fall by 8% in the year ahead - although this drop would not be sufficient to wipe away all the gains made in recent years.
According to Halifax, the average house price increased by 23%, or nearly £55,000 in cash terms, between March 2020 and August 2022.
To put the predicted 8% fall in house prices into perspective, the bank’s homes director Andrew Asaam said: “Such a fall would place the average property price back at roughly the level it was in April 2021, reversing only some of the gains made during the pandemic.”
Surging living costs, including some mortgage outgoings, and expectations that unemployment will also rise will add to the challenges the housing market faces.
However, a continued lack of homes for buyers to choose from is expected to continue to support house prices.
Nationwide Building Society expects house prices could edge down by around 5% in the year ahead. And trade association UK
Finance said it expects the number of house sales taking place to fall to around one million in 2023 from 1.2 million in 2022.
Richard Donnell, executive director at Zoopla, said that, despite the “shock” of mortgage rates jumping in autumn 2022, “banks are well-capitalised and ready to lend”.
Zoopla expects sales will be supported by buyers looking for space to work from home, an ongoing spike in people retiring and - amid high energy costs - some people moving to properties that may be more cost
effective to run than their current homes.
Mr Donnell said: “Overall, 2023 may well confound the more gloomy forecasts made at a time when the outlook for mortgage rates looked much worse.”
Rightmove predicts national average asking prices of new properties coming to market will be 2% lower by the end of 2023.
Its property expert Tim Bannister said: “Although the wider economic climate has settled a little leading into Christmas, there is no getting away from the fact that pressures on personal finances and mortgage rates stabilising at a higher rate will impact overall affordability in the market (in 2023).
“We think this will contribute to a 2% drop overall in new asking prices in the UK market.
“For context, this would only take average asking prices for new properties coming to market back towards where they were in February (2022).”
Mr Bannister said differences between “hyper-local” housing markets may become more pronounced “where one side of a city, town or even street could fare better than another, depending on the types of property available and the desirability and affordability of the exact location”.
He added: “We expect there may be a stand-off on price between buyers and sellers, particularly in the early months of the year as the tone is set for the year ahead.
“Though many buyers will feel the pinch of stretched affordability and will try to negotiate hard for the home they want, sellers may not be in a rush to meet their expectations and will feel like they can hold out for the price they want, particularly if they don’t see much competition from other sellers in their area.”
Mr Bannister continued: “We’re heading towards a better balance between supply and demand next year but we don’t expect a surge in forced sales, which would cause a glut of properties for sale and contribute to more significant price falls in 2023.”