The UK Property Market: What Can We Expect For The Year Ahead
As we begin the new year, it's important to take a look at what's happening in the UK property market. So far, the numbers are looking good. In fact, the level of activity in January and February is almost identical to what we would expect in a pre-pandemic market.
Review of January and February 2023
To get a clear picture of the market, it's essential to compare today's data with the corresponding periods of 2017, 2018, and 2019. According to the latest reports, there was a 5% increase in the number of new properties brought to the market in January and early February compared to the same period in previous years.
The number of new sales agreed also increased compared to 2018 and 2019, indicating that the underlying demand for property is still high. This is good news for sellers, who can expect to get a good price for their property.
At the beginning of the year, there were concerns that property prices would fall after a challenging end to 2022. However, the data shows that the average asking price has grown by 3.2% compared to the end of 2022. This increase is in line with our prediction that we would see little change in prices. In fact, asking prices rose by 0.9% in January, the most significant increase for this time of year since 2020.
Outlook For The Rest of 2023
Now that we've looked at the data for the start of the year, let's examine why we don't anticipate a house price crash in 2023.
Interest and Mortgage Rates
Interest rates have returned to a more normal level, similar to what they were before the 2008 financial crisis. Although rates have risen, they are expected to top out at around 4%, according to most economists. As long as interest rates remain below 5%, the market should continue to thrive.Inflation and Energy Prices
Inflation has been a concern in recent months, along with the rising cost of energy. However, there are signs that the situation is improving. The Bank of England and the government have announced that inflation pressure is easing, and energy prices are starting to fall.Real Cost of a Property
When adjusted for inflation, the cost of a property is the same as it was in 2003. This means that media reports about unsustainable price rises are unfounded. Additionally, the cost of a mortgage as a percentage of take-home pay is the same as it was in 1972.Predictions
Based on the current data, we expect a relatively normal market in the first six months of 2023. Large developers are likely to slow down their pace, which will constrain the supply across most of the market. However, there is still plenty of buyer demand, and a competitive mortgage market should lead to house price growth of around 4% to 5% throughout the year.
