With the New Year now well underway, those with an interest in the UK property market will no doubt be waiting with some degree of anticipation, to see if (and how) the predictions of a ‘slow-down’ play out in the coming weeks and months.
By all accounts, the headlines of late have not made for particularly positive reading, but many mainstream analysts are quick to rebut the claims, and suggest that the impact of recent challenges on property prices will probably be less than what is being predicted.
It's an opinion seconded by the team at Braxton - Maidenhead’s leading Independent Estate Agent - who believe that many of the more positive indicators of market ‘recovery’ are seeming to get lost in the vacuum of ‘click-bait’ journalism.
These factors include, but are not limited to, the return of longer-term interest rates to levels seen before the mini-budget. Should this continue, there will inevitably be a positive knock-on effect on mortgage rates – something that would come as welcome news for borrowers.
To this end, Nationwide, TSB and Virgin Money have all announced plans to cut mortgage rates on their fixed mortgage deals, and while there is a long way to go before rates are ‘normalised’ and buyer confidence is fully restored, this could be viewed by some as a step in the right direction.
What is important to also take into account, is that the limited supply of properties currently for sale does help to bolster values, and mainstream economists hasten to suggest that subsequently, any decline in house prices this year is likely to be ‘modest’, and around 5%.
In their opinion, for the tabloid forecaster’s worst case, double-digit decline scanario to actually eventualise, the labour market would need to deteriorate significantly, and mortgage rates would need to rise over and above the 4% that they anticipate they will peak at (a figure that would only affect the minority of mortgage-holders nearing the end of their fixed rate deals.)
None of this is to say that the 2023 economic environment will not be challenging, or that a long haul of squeezed budgets isn’t somewhat inevitable.
Homebuyers, investors and business owners should certainly keep this in mind, but likewise should be encouraged to remember three things: Firstly, that interest rates are but a ‘metric of the moment’ and not the only indicator of the health of the property market. Secondly, that we are emerging out of more than a decade of record low interest rates, and that the ‘nosedive’ we are being threatened with therefore only equates to a loss of half the pandemic price spike. Lastly, activity in rural settings (areas rich in jobs and services) and coastal locations remains especially robust.
Summary
At the moment, all the indicators are that financial market conditions have settled, but understandably the legacy of recent economic turmoil has been a significant dent to buyer confidence, and the market has certainly softened as a result. In addition, the increasing cost of living crisis is feeding uncertainly and creating more pressure on household finances. As such, those buyers returning to the market in 2023 will likely be doing so with caution, and a much more price sensitive approach. The catalogue of ‘what ifs’ will likely be enough to deter ‘casual’ home movers for the time being, making them more likely to sit on their hands and take stock. The same, however, can not be said of those buyers who are down-sizers or whose move is ‘needs based’ (ie. relocating for work or personal reasons.)
With all of these considerations in mind, serious buyers and sellers deciding to step into the market this year, can do so with some degree of positivity and confidence, especially as the property picture shows continued signs of rebalancing to reflect the era's 'new norms.'
For more information on buying or selling your property, contact Braxton's experienced team of agents on 01628 674234.
Main image: Property available for sale in Lassell Gardens, Maidenhead