Despite financial uncertainty, exclusive data collected by Cornerstone Tax revealed that, in a survey of 2000 people, 55% were not deterred from purchasing property in 2023 - compared to 45% who said they would halt proceedings. Hannah believes that the 55% who will follow through with purchases in 2023, will be buyers that are less dependable on interest rates.
Foreign investors will also seek to take advantage of the fall in the price of Sterling, essentially, making the UK housing market 10% cheaper. The 45% that will hold off on purchasing will be most likely first-time buyers, who now cannot afford the inflated mortgage payments.
The general consensus amongst market analysts predicts the housing market to crash in early 2023- as much as 20%. Despite this, Hannah is confident in his prediction that the market will stabilize and property purchases will continue in 2023 due to the increase of foreign investment in cities across the UK – currently overseas investors own £90.7bn of property in England and Wales.
Hannah also asserts that the market will in fact experience high single-digit growth by 5-8% and that eventually the 45% that decided to hold off will be enticed back to the market in 2023. Hannah believes there will not be a crash - there may be a short-term reversal, but the long-term trend is still upwards.
David Hannah, Group Chairman at Cornerstone Tax, comments: “We have faced a massive set of instabilities. We've had two years of the pandemic, necessary pandemic spending, we've had the war in Ukraine and that has increased inflation which has led to a massive increase in interest rates. Recent government policy in the UK has led to a devaluation in sterling and at least one if not two regime changes in the conservative party and all of these factors have added to a sense of uncertainty about what's going to happen in 2023.
“In early 2023 we will see slow demand. Only those people that are forced to sell will see a small fall in prices, however, over the whole of 2023, I expect to see low to mid to single-digit growth over the UK property market- between 5-8%. Despite the negative headlines we have been seeing, there is an underlying pressure on the market and that is leading to upward pressure on prices.
He adds: “We now have a growing number of people that want to move to the UK. The first is the overseas investor who regards UK property as a safe haven for their money because the country they principally live in is not economically or politically safe. The second are those who want to become second homeowners. The third and final group is those who want to leave their country of birth and are in need of a home. All of these factors over the course of the next 12 months, I believe, are what will support the UK market and leave it with a modest and steady rate of growth.
David concludes: “There will be NO crash and NO 10-20% fall in property prices that we saw in the noughties. The UK property market has tended to be more stable than any other global market in property.”
