Home Prices Will Decline By 5% Nationally in 2023

The UK housing market has been fluctuating in recent years, with changes in prices influenced by various factors. In 2023, it is predicted that nationwide home prices will decrease by 5%. While this may seem like bad news for homeowners and buyers alike, leading estate agents based in Bishops Cleeve explain the reasons behind this predicted to decrease and the potential implications it may have.

In September 2022, a mini-budget led to mortgage rates climbing to recent record highs of 6.5%. This has brought the housing market to a near standstill in the last quarter of 2022. According to data, demand for homes is down 50% year-on-year, while the number of properties sold subject to contract has dropped by 28% over the same period.

The trend of people moving to rural and coastal locations due to the pandemic has begun to slow down. This has led to a decrease in demand in some southern parts of England, such as east Kent, Portsmouth, and Torquay, as well as the Lake District and mid-Wales. However, urban settings with job growth and more services have seen stronger buyer interest, such as Bradford, Swindon, Coventry, Crewe, and Milton Keynes.

The average value of UK properties (based on the data available up to November 2022) has increased by 7.2% compared to the previous year. This means that the average property value is now £258,100, which represents an increase of £17,500 in cash value. However, the underlying rate of quarterly price inflation has slowed in recent months, which may indicate a future decrease in home prices. Over the past three months, the base rate of quarterly inflationary pressure has decreased from more than 2% throughout the summer only to 0.3%, translating to an annual growth rate of about 1.4%.

Data collected by Zoopla show that yearly house price rises in certain cities surpassed the national average. In the 12 months leading up to November 2022, Nottingham had the best performance with a rate of 11.1%, trailed by Leeds (9.3%), Manchester and Birmingham (both 9.2%).

Only Aberdeen, out of the 20 cities tracked, had a decline in home price increase during the time, with a fall of -0.7%. Additionally, certain UK locations saw yearly high price rise that was higher than the national average. South West of England recorded 8.5%, while the West Midlands and the East Midlands recorded 8.4% and 8.3%, respectively. Wales was at the top of the list with 9.2%, while London was in last place at 4.1%.

Interest rates have been at historic lows for several years, but they are expected to start increasing in 2023. As interest rates rise, it becomes more expensive for buyers to take out a mortgage, leading to a decreased demand for housing. This, in turn, can lead to a decrease in home prices.

As the demand for housing decreases, it is expected that there will be an increase in the number of homes available on the market. To attract potential buyers, it is likely that home prices will decrease as the supply increases. Additionally, with fewer buyers in the market, competition among them may decrease, potentially leading to a decrease in property values.

While a decrease in home prices may have negative implications for homeowners, it can also create more opportunities for buyers. Lower home prices create more opportunities for buyers as it becomes more affordable for individuals and families to purchase a home. With less competition, it may be easier for buyers to find a home that fits their needs and budget. However, for homeowners, a decrease in home prices can lead to a decrease in the value of their property.

It’s important to note that these predictions are not always accurate and the housing market in the UK is constantly fluctuating. It is important to stay informed about current market conditions in order to make informed decisions about buying or selling a home. While a decrease in home prices may seem like bad news, it is important to understand the underlying reasons and potential implications.

In conclusion, the predicted decrease in home prices in 2023 is driven by a variety of factors, including the current state of the economy, mortgage rates, and the laws of supply and demand. Individuals and families need to understand the current market conditions in order to make informed decisions about buying or selling a home.