After years of unprecedented price growth, 2023 is looking like a year of change for the UK property market.
Falling prices, high inflation and rising interest rates at the end of 2022 sparked headlines of a potential ‘price crash’ this year.
But is this likely to happen and if prices do fall, what can you do to mitigate the effects?
We’ve put together this guide, which separates fact from fiction and is full of helpful advice on what to do if you’re thinking or buying or selling in 2023.
Will house prices drop in 2023?
The two years between the summers of 2022 and 2023 saw incredible price growth at almost all levels of the UK market.
In 2021, prices grew UK-wide by 6.3% and in 2022 this was followed by 5.6% growth.
This year is looking like a different story, with most experts predicting price falls across the board:
- Rightmove predicts a 2% drop in prices
- Zoopla predicts prices will decrease by ‘up to 5%’
- Halifax suggests prices will fall by 8%
But with prices having grown at such a fast pace since 2021, prices in most areas of the UK would still remain above their pre-pandemic levels even if these predictions were to come true.
What will happen to interest rates?
Interest rate rises were a staple of the 2022 news agenda, with Bank of England rates increasing from 0.1% in December 2021 to 3.5% at the end of 2022.
There’s no doubt that the record-low cost of borrowing from the past few years is now a thing of the past.
But predictions of 6% mortgage rates in 2023 do appear to have been overblown, with rates starting to fall at the end of 2022 and a revised predicted rate high of 4.5% made by experts.
Banks need to make money by securing market share and are becoming increasingly competitive, so expect rates to reflect this.
What to think about if you’re buying or selling in 2023
- Get good mortgage advice
Interest rates are rising and while they now look unlikely to peak as high as previously thought, securing the right mortgage is more important than ever.
Seek advice from a mortgage broker or financial advisor if you’re planning to buy in 2023 and think carefully about the best type of mortgage for your needs now and in the future.
- Think carefully about waiting to buy
In a falling market, the prospect of buying a cheaper property can mean buyers hold off on a purchase to see just how far prices will fall.
But with rising interests running in tandem with price falls, any saving you make on purchase price could be wiped out by rising borrowing costs.
This means if you’re ready to buy, with a good financial position and solid plan for the future, ‘now’ could be the right time rather than sitting tight.
- Buy for the long term
The best way to navigate property market uncertainty is to future-proof your plans for the long term.
By purchasing a property that works for you now and in the future, you’ll be able to settle in and ride out market changes until more settled times reappear.
Buy a home for the long-term, so you don’t have to move again until the future, and select the right mortgage with good, sound advice.
- Make use of your local agent
Change in the UK property market isn’t often a ‘one-size-fits-all’ scenario.
Prices in some areas will hold up better against economic uncertainty, while others may suffer more.
And buyers in another area may be more active than those elsewhere in the country.
When this is the case, working with one of our local branches is more important than ever if you’re selling your home.
Our local agents will know exactly how the market is performing in your area – helping you to price your property well and secure a quick sale.
We’ll also be able to pre-qualify buyers – giving you the best chance of securing a sale to someone who’s able to progress and providing you with great certainty that you’ll complete without a hitch.
If you’re selling your home for the first time in 2023, you could be forgiven for feeling somewhat daunted by the prospect.
However, our guide on what to expect can really help to settle those nerves.