What will happen to the property market in 2023?

We outline what we think will happen within various different areas including the property market.

Base rate

It is a hard one to call on base rate whether it has already peaked or is going to keep rising. We suspect that long term rates will come down but in the short term there might be more pain to come through. We can confirm that five year mortgage rates have now dropped below 6% from the October rate of 6.5. However, if the recession bites as hard as it potentially could then the Bank of England have got only one way to go with rates and that is upwards not downwards. Lets all hope they stay where they are and slowly come back down.

Repossessions

We don’t think we will get back to the high numbers of repossessions as there was previously. However, we suspect that Banks will start to tighten their belts and look at people who have got high loan to value. We suspect quite a few businesses will start to struggle and more than likely fail. We hope that we are wrong in this area. However, we don’t see a huge amount of repossessions with mortgage companies. We suspect what is more than likely the issue is people will sell with a view to moving back into rentals for a period of time. This will exaggerate the lack of property on the market.

Planning – More delays

Whilst Michael Gove was due to put wide spread planning rules through unfortunately, he got opposition from his own MP. They have already backed down on their limit of 300,000 and have decided not to have a set figure. This will only add to the pressure on the housing market.

The Renters Reform Bill

This is a very much long awaited bill which has been introduced to parliament with a view to abolishing the section 21 notice. This is a notice for tenants to vacate a property without having to give a reason. There are also a huge amount of other elements contained within the Renters Reform Bill of which actual details have not yet been released. Only headlines. However, most of what they are proposing may not become law until after the next general election. It is even doubtful whether it will actually get through parliament depending on when the general election is. Our thoughts on this are to watch this space as it is very wide ranging.

Labour may well call for UK wide rent fees

There has been signs that Labour were potentially calling for this. However, it leads to disinvestment by private landlords and worst than housing standards. We might find that the conservatives even take this mantle up themselves. Lets hope not.

Online market share to remain roughly the same if not less

There are signs already that some of the online providers are starting to struggle and during a recession it is never good for them. Purple Bricks has recently shown quite substantial losses in this market and there is a potential big hike in their fees soon.

Air BnB’s and Holiday homes – Will legalisation come in?

We expect holiday homes and short term property lets to have some form of legalisation. We understand that some local authorities are now even looking to the planning rules in order to cap these in certain areas. As they are causing more problems that they are solutions for local people. If you have one expect there to be some legalisation in certain areas.

Will there be job losses?

Unfortunately, we suspect there will be job losses across the whole of the economy. Not just in property. Unemployment is a horrible situation for people and no-one is safe in this current market with recession coming.

Rental demand

We expect rental demands to stay exactly where it is and in fact increase. We understand a lot of people are looking to sell up into the market and move back into rental which will push the demand up even further.

Most renters are not looking to move at this moment in time so the lack of property will stay for most of the year. Some people will start to faulter and will have to come out the market but there will be more people replacing them in this instance.

Will the sales market drop?

All the evidence is that mortgages have become harder to obtain and there is a high likelihood that prices will come down. There has already been evidence recently in the last few months that with the Government completely turning the mortgage market upside down and interest rates coming high there is a inevitability that the sales market will come down. We anticipate anywhere between 10-20% over the next 12-24 months. It does depend on whether there is another election and what the Governments do. We have already seen prices start to come down over a period of time. The Bank of England increasing rates will also make a big difference in this area.

Do you have a property you want a valuation on for sales or lettings purposes? Don’t hesitate to contact us.