January Property Market Report
Not just the end of a month but the end of a year too. Our market report for December reflects the activity of the last few weeks and looks ahead to 2023. After analysing reports from a number of trusted sources, the industry consensus is we’re back to normal, pre-pandemic conditions.
December saw signs that the sales market was regulating. Rightmove’s latest figures revealed the average price of a property coming to market dropped by 2.1% in the final weeks of 2022. This equated to -£7,862, indicating sellers are adjusting their price expectations in line with current sentiment.
Asking prices & interest remains high
For balance, the portal added that 2022 ended with new seller asking prices 5.6% higher than a year ago. Rightmove’s analysis also revealed the number of views of homes listed on its site were up 11% in December, compared to the same period in 2021. The desire to move home remains strong as we start 2023.
A soft landing ahead
The burning question for 2023 is ‘will house prices fall?’. Earlier sensationalised predictions of 15%-30% falls have been replaced by more realistic, single-digit predictions. In December, Rightmove forecast a future drop of an overall average of 2%. As a caveat, it says hyper-local markets will emerge, with some locations, property types and sectors faring better than others.
The portal’s price forecast is not too dissimilar to another by a respected source. The Nationwide says a ‘relative soft landing’ for the sales market could be achieved in 2023. As a result, the building society says an approximate 5% fall in house prices may lie ahead.
Homeowners should remember house prices rose in the region of 10% during 2021 – an extraordinary figure. This followed an annual rise of around 8% in 2020. Any price corrections in 2023 should adjust the unnatural, hyper-values seen during the pandemic.
Those planning a property purchase in 2023 should take heart from activity noted in December. Zoopla says reductions in the cost of Government borrowing have had a positive effect on mortgage rates. The trend was downwards at the end of 2022, with fixed mortgage rates falling, despite an interest rate hike.
There’s also good news for those remortgaging. December also saw the Government and mortgage regulators announce a move set to help during the cost of living crisis. They agreed that existing borrowers who are up-to-date with repayments won’t have to complete a new affordability test when remortgaging to a different deal.
Rents continue to inch upwards
The rental market has seen sustained rental value growth in the short and long term. The latest HomeLet Rental Index, released in December, revealed the average rent in the UK is now £1,175. This is 0.3% more per month, compared to the previous four weeks.
When looking at the last year, the latest data from Zoopla showed rents for new lettings in the UK had risen 12.1% over the past 12 months. New tenants are now paying £1,400 more a year, when compared to 2021.
More rises on the way
All eyes are looking ahead to 2023, with a question mark over the future cost of renting. Zoopla’s forecast is bittersweet. While it thinks the rate at which rents will rise over the coming year will slow, new renters will still be paying more. It predicts rents attached to new tenancies will rise 5% in 2023, compared to the 12% uplift seen in 2022.
In Scotland, landlords will also pay more in 2023, thanks to a tax change. The Additional Dwelling Supplement is a tax on second homes that is paid as part of Land and Buildings Transaction Tax. This tax rose from 4% to 6% on 16th December 2022.
If you would like to know more about your local property market, please get in touch.
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