It’s a new year and the property market is shaping up to potentially look quite different in 2023.
You’ll have seen the headlines about rising interest rates and the slowdown of the market as 2022 drew to a close.
But how much is fact, how much is fiction and what exactly does 2023 have in store if you’re thinking of moving?
And, most importantly, what do you need to think about before buying in this changing market?
Will house prices drop in 2023?
You may have seen doomsday predictions of double-digit property price falls in 2023 after the government’s mini-Budget fall-out, rising levels of inflation and increasing mortgage interest rates.
Key property market commentators amended their predictions for prices this year, however, as financial markets stabilised towards the end of 2022:
- Rightmove predicts a 2% drop in prices
- Zoopla predicts prices will decrease by ‘up to 5%’
- Halifax suggests prices will fall by 8%
It’s important to remember that prices grew by 5.6% in 2022 and by 6.3% in 2021.
So, even with those kinds of falls, prices would remain above their pre-pandemic levels.
All of which makes the most likely scenario for 2023 an ‘adjustment’ rather than a ‘crash’.
What will happen to interest rates?
One of the biggest barriers to buyers looking to purchase at the end of 2022 was sudden rises in interest rates.
Successive Bank of England rises took the base interest rate from 0.1% to 3.5% in just 12 months, while the mini-Budget fall-out caused a certain degree of panic from mortgage lenders.
And this led to predictions mortgage interest rates could rise as high as 6% in 2023.
Those predictions have now been downgraded to 4.25% by economists, and mortgage interest rates had already started to fall back at the end of 2022.
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
With interest rates much higher than they were 12 months ago, choosing the right mortgage has never been more important.
Speak to a broker or financial advisor and get the right, independent advice.
- Think carefully about waiting to buy
Rising interest rates and falling property prices mean many buyers are adopting a ‘wait and see’ approach.
However, think carefully about whether now is, in fact, the right time to buy.
Because while you may save money on your purchase price by waiting for prices to drop further, higher interest rates in the future could cancel out any savings you make.
- Buy for the long term
If you’re buying with a small deposit, perhaps because you’re a first-time buyer, think about purchasing a future-proofed home that will suit your needs for several years.
If you buy now, buy for the long term, which will give you the best chance to ride out the uncertainty until prices start to rise again.
- Make use of the experts
When the market is changing but there’s lots of uncertainty and conflicting opinions on what may or may not happen, it becomes even more important to have experts on your side.
Property market forces can vary from town to town, city to city and region to region.
So, if you’re thinking of selling, arm yourself with Martin & Co's local area knowledge.
Each of our Martin & Co branches will know how the market is performing in their areas and be able to advise you on the best asking price for your property based on your needs.
We’ll also bring pre-qualified buyers to your door, ensuring only proceedable buyers get to see your property – eliminating wasted time and ensuring your property is sold to someone who can move quickly.
Before you sell your home, think about whether it’s ready to be sold.
Our guide is packed with useful information, so you can ensure you’re fully prepared to sell your home and can hit the ground running once that For Sale board goes up.