Fine & Country National Housing Market Report January 2023

NEW YEAR, NEW MARKET

Many tuned in as the UK heralded 2023 with dazzling pyrotechnic displays. However, with unease in some sectors of the economy and many households feeling the pinch, the spectacular house price growth of 2022 is likely to be muted in 2023.

TRACKING BACK

After three years of somewhat unusual housing market activity, 2023 will be a calmer market as the heat of the last two years continues to cool and the economic backdrop checks sales activity and demand. Rightmove and Zoopla both report that property trends are heading back to those last seen in 2019; there are signs that the so-called “race for space”, which has epitomised the market in recent times, has run its course. London returned to its top spot as the most searched-for location in 2022, and while levels of new buyer demand faltered as 2022 drew to a close, in affordable and accessible urban areas demand is firm. UK price growth remains in positive territory, however, Nationwide report the annual rate of growth fell for the fourth consecutive month in December 2022, to 2.8%; month-on-month prices dropped by 0.1%.

Across the prime markets of England and Wales annual price growth remains positive in all regions, although there is evidence of a North/South split in fortunes compared to a year ago. Annual price growth has moderated significantly across the North and the Midlands, while annual price growth in prime markets across the South and London is currently stronger.

A BUYER’S MARKET

The market in 2023 is set to favour the buyer, although buyers who transact in 2023 will undoubtedly be more cautious and more price sensitive than in recent times. Realistic pricing from sellers for market conditions will be crucial to achieving a sale. Rightmove reported that at 2.1%, the fall in newly-listed prices in December was higher than usual and the proportion of properties selling with a price reduction is on the rise (Zoopla). With less competition in

the market, the time taken to sell a property is edging upwards in all regions except London. However, at 45 days in November, it remains considerably lower than the 67 days recorded for November 2019 (Rightmove, UK average). Discretionary purchasers have dominated the market in recent times and needs-based buyers are set to assume a higher proportion of sales this year.

MORTGAGE MATTERS

Affordability, both in terms of household costs and mortgages, will undoubtedly impact the market of 2023. UK Finance anticipates that the number of house purchases will fall by 21% in 2023 to just over 1 million, while lending by banks and building societies will return to pre-Covid levels.

Mortgage rates for home movers start 2023 lower than in recent months, with a number of fixed-rate deals below 5% available for those looking for a loan-to-value below 75%. However fluctuations in the Standard Variable Rate are still evident, the Bank of England having raised the base rate to 3.5% in December. Latest forecasts from HM Treasury indicate the official bank rate will be 4.3% during the final quarter of 2023. Rates for first-time buyers remain at over 5% (based on a 90% loan- to-value), with research by the Yorkshire Building Society indicating that there was a 9% fall in first-time buyer numbers year-on-year in 2022. However, this market still accounted for 52% of all property purchases with a mortgage, up from 41% a year ago. The recent announcement of the extension of the Mortgage Guarantee Scheme until the end of 2023 will prove beneficial to this sector.

£505,000 £704,018 +1.8% £366

R E G I O N A L

P R E M I U M M A R K E T S : TO P 5 %

£579,000 £780,281 +5.8% £388

£490,000 £637,759 +7.7% £339

£772,000 £1,083,799 +11 7% £513

£1,000,000 £1,449,063 +9.8% £611

£400,000 £556,905 +4.3% £290 £494,000 £682,248 +4.3% £348 £528,000 £701,046 +4 4% £338

£835,000 £1,146,099 +9.2% £557 £1,710,000 £2,803,416 +15.6% £1,292

PROPERTIES SOLD ABOVE THE PREMIUM PRICE THRESHOLD

The premium price threshold is the value over which the top 5% of property sales occur. The chart shows a rolling 12 month change in the average price paid for premium properties compared to the previous 12 month.

BY PROPERTY TYPE OVER THE LAST 12 MONTHS, PROPERTIES SOLD ABOVE THE PREMIUM PRICE THRESHOLD

An individual premium price threshold is calculated for each property type based on sold prices in the last 12 months. The chart shows the average price paid per square foot for all of these premium properties.

ALL PROPERTIES SOLD ACROSS THE REGION

Rolling 12 month change in the average price paid for all properties sold compared to the previous 12 month period.

BY PROPERTY TYPE OVER THE LAST 12 MONTHS OF ALL PROPERTY SALES

Average price paid per square foot for all property transactions.

Average number of days from when a property is first marketed on Rightmove to when the estate agent marks it as “sold subject to contract”.

Average stock per agent calculated by the average number of properties an agent has on Rightmove each day across the month.