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Property market prediction: 2023 could be ‘tough’ for homeowners, claims expert

Homebuyers and sellers have experienced a set of new challenges this year in the face of a cost of living crisis, economic uncertainty and political woes. With house prices set to plummet and mortgage rates remaining high, next year could pose more challenges for buyers and sellers.

By Millie Bull

The UK property market has weathered a significant shift over the last year after almost two years of record-breaking price increases during the coronavirus pandemic. The latest data from mortgage lender Halifax claimed UK house prices saw their biggest drop in 14 years in November 2022 after falling 2.3 percent.

November marked the third month in a row where house prices fell. The average UK house price in November was £285,579.

The cost-of-living squeeze, economic uncertainty and higher mortgage rates are all thought to be having an impact on the UK’s property market.

Annual house price growth dropped from 8.2 percent to 4.7 percent, according to the latest data.

Kim Kinnaird, director of Halifax Mortgages, said: “While a market slowdown was expected given the known economic headwinds – and following such extensive house price inflation over the last few years, this month’s fall reflects the worst of the market volatility over recent months.

“Some potential home moves have been paused as homebuyers feel increased pressure on affordability and industry data continues to suggest that many buyers and sellers are taking stock while the market continues to stabilise.”

But it’s not just buyers and sellers feeling the pressure, renters are also facing an affordability crisis with the prospect of owning a home fading further into the future.

In light of this, Simon Bath, property expert and CEO of property technology company, iPlace Global, has shared what he thinks could be in store for the property market in 2023, and what homeowners and aspiring buyers should look out for ahead of the new year.

Whilst house prices are projected to fall by nine percent over the next two years, UK mortgage approvals this month fell to the lowest levels since June 2020 thanks in part due to September’s catastrophic mini-Budget.

Higher mortgage rates have therefore decreased the number of property transactions across the market with a total of just 58,997 mortgages authorised in October – down from 65,967 in September, according to the Bank of England (BoE).

Simon said affordability issues could be an issue in 2023 especially if inflation continues to rise and people tighten their purse strings further.

iPlace Global found over the past six months, 22 percent of British homeowners have considered changing mortgage deals because they simply can’t keep up with payments.

An additional 25 percent admitted they needed to adjust their mortgage deal due to rising interest rates, but didn’t know where to start.

Simon also suggested that the number of mortgage defaults could increase next year as households are consumed with more debt.

Recent reports revealed that in September, outstanding consumer credit lending reached £206billion rising by £482million in just one month.

Homeowners with interest-only mortgages who are watching their monthly repayments fluctuate in line with the bank rate, this could place them under further financial strain.

Simon said: “The fallout from September’s mini-budget is definitely being felt by mortgage holders.

“Unfortunately, this has also coincided with a terrible time in the lead-up to Christmas, particularly because this is usually when the property market slows down to basically nothing.

“Throughout the past few years, we’ve seen demand continue to outweigh stock levels, however, we’re starting to see this dwindle – it’ll be interesting to see what happens between the period of Christmas and New Year, as I think this will be a telling time for the housing market.

“Typically, this is the time when we see a peak in interest from prospective buyers who either want to upsize or downsize which can cause a big stimulus in the market.

“If we don’t get that big bump in demand in January, it could suggest that the fall out of recent events could linger even further into the New Year.

“I think that the first half of next year could be quite tough for the housing market in general due to the sharp rise in mortgage repayments – families are definitely going to feel this most.

“It’s important for the Government to look at the state of the market and introduce new schemes to support both aspiring buyers and existing homeowners so that the dream of owning a home doesn’t become even more unattainable than it already is for many.”

 

Content retrieved from: https://www.express.co.uk/life-style/property/1706775/property-market-prediction-house-prices-2023-expert-advice.

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