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What will 2023 bring? Is it possible to predict the future?

Posted:
30 January 2023
Time to read:
3 mins

Though the last few years have been the most turbulent in recent times, the property market has continued to soar. The question now, as we begin 2023, is will it finally stall or merely pause to refuel?

Low-interest rates…a thing of the past?

The days of low-interest rates appear to be well and truly over, at least for the foreseeable future, and as a dark cloud of recession looms over the UK and inflation continues to rise, only a select few can still afford to buy a home. The impact this will have on the housing market is yet  to be seen in full but Halifax reported this month that the average house price fell by 1.5% in December, following a reported fall of 2.4% in November.

Over the last couple of years, there is no doubt that the property market has been incredibly buoyant and 2022 started positively. House prices had increased and the market was flying. There were a number of factors at play: interest rates were low and borrowing was affordable (particularly for first-time buyers); demand for property was high and there were more buyers than there were properties to purchase - pushing up average house prices; and a global pandemic had increased the time spent at home and people were looking for a change – many wanting home offices and gardens and a shift out of the city.

The changing tide

But towards the end of 2022 the tide started to turn. The cost of living crisis coupled with interest rate rises began to impact the affordability of borrowing for all. Even with the stamp duty changes announced in the Chancellor’s Autumn statement, the saving in upfront stamp duty was doing little to help the general overall cost of borrowing and household bills. Borrowers whose fixed-rate mortgages were coming to an end were also struggling to agree on a favourable deal.

With inflation far from under control we expect more base rate rises from the Bank of England, pushing up borrowing costs further and potentially pricing many first-time buyers out of the market. For those that choose to stay put and improve their homes or are looking to renovate properties, the cost of building maintenance has also risen steeply. Suddenly those ‘doer-uppers’ may not seem like such a bargain after all. What’s more, with many borrowers facing a cliff edge at the end of their fixed-rate mortgages, opportunities to scale the housing ladder may be reduced.

The outlook

If the last few years have shown us anything, it’s that we never know what’s around the corner. 2023 will almost certainly be an interesting year in the housing market that will bring tough decisions for many, as well as potentially strong investment opportunities for cash buyers. Whatever your situation, the property team at Birkett Long are here to help you navigate your way through.

To discuss how Birkett Long can help you with your property needs please get in touch via email [email protected] or give me a call on 01245 453861.

 

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