The UK Housing Market in 2023

Has the bubble burst?

Since the financial crisis of 2008, the housing market’s been on an upwards trend – pausing at the start of the pandemic. Has the bubble burst? The Royal Institution of Chartered Surveyors says high interest rates, falling house prices and a drop in demand have all had an impact. Estate agents report fewer enquiries each month since Sept 2022 and stock levels are at historic lows. If interest rates and living costs increase, the Bank of England predicts the number of houses struggling to pay mortgages could rise to levels unseen since 2008. At the end of 2022, Lloyds forecast a 9% fall in the market, Capital Economics a 12% fall and Credit Suisse a 15% fall.

Is it all gloom and doom?

Knight Frank forecast a fall of 5% in house prices in 2023 and 24 before returning to growth. They believe shortage of homes, sensible loan-to -value lending and low unemployment rate will keep prices stable and repossessions low.

Zoopla believe people’s motivation to move won’t change. Buyers look for more space, a home office and what’s cheaper to heat and run.

“The housing market in 2023 mainly looks set to be one of readjustment as we return to normal levels of mortgage rates.”

What

about first time buyers?

First-time buyers could benefit from the turmoil. In the Sept 2022 Mini Budget, the Government increased the threshold for Stamp Duty to £425k for first time buyers.

No-one truly knows how much prices will fall by. You could be waiting ages for them to hit rock-bottom. You could ride out the predicted downturn by staying home for 3 years. Putting down a large deposit reduces chances of being in negative equity. Firsttime buyers may have more advantage for quick sales as there’s no chain to hold up the process.