Will House Prices Fall in 2023?
Will House Prices Fall in 2023? It's a question that many are commenting on this year. With some news outlets predicting house price crashes and this being a message dominating the headlines. We thought we'd share our thoughts on the matter, using information we see on the ground here at Manning Stainton Estate Agents.
In this article, we'll delve into the predictions made for the year, analyze the price growth and fluctuations, and consider the prospects for the coming year. We'll explore the factors that shaped the market in 2022, and weigh in on the question of whether we can expect prices to continue to rise or if a price crash is on the horizon.
What Happened in the Market in 2022?
It is appropriate to begin by summarizing what has been an interesting year for the property market. The year has been rather predictable in many ways. One of the predictions heading into the year was that prices would, at some point, reach their ceiling. Following an unprecedented boom period, this was inevitable. The market, which was seen from the second half of 2020 right through to the beginning of last year, was always going to run out of steam, and indeed it did tail off to more static price growth in the later stages of 2022.
Another one of the predictions was more positive in tone. House prices will rise in 2022, it was believed despite the outlook of the most sceptical of commentators. But was it correct? The Rightmove asking price index tells us that prices in the Yorkshire and Humber still remain 7.3% higher than at this time last year and the land registry index has prices 12.6% higher than a year ago (at the time of writing). A prediction which is pleased to have come to pass. But will prices continue to grow in 2023?
Will Prices Fall in 2023?
It's no secret that the latter half of 2022 saw more rocky market conditions than at the start of the year. This pronounced change in the market was triggered by the now infamous mini-budget and the sharp interest rate rises that followed. This resulted in the average sale price coming down by 2.5% when compared with where it was at the end of the summer. A clear sign of prices correcting themselves over the last couple of months.
This being said, it is not seen that these price corrections will result in a price crash over the coming year and this is for two reasons: Firstly, those who want to buy can do so. There is no issue with lenders liquidity, and it is seen very clearly that mortgage rates are continuing to settle. Secondly, the supply of property has capacity to increase. The stock of property available in the market at the end of 2022 may be double the numbers seen at the same time in 2021 but it still has room to grow on the “normal market” levels seen in 2019 and 2018.
In respect of this underlying level of demand and the relative constraint on supply, it is suggested that whilst it is not expecting to see any growth in prices next year, it just cannot see this big price drop that so many are trying to predict.
