We've rounded up some expert opinions...
HOUSE PRICES
Marc von Grundherr, director of Benham and Reeves: “A further increase to interest rates will certainly spur a continued cooling in current property values but it’s extremely unlikely we will see the deep freeze that many may lead us to believe. At most, we can expect a five per cent drop during the first six months of the year, at which point stability will return and house prices will start to level out.
Chris Hodgkinson, managing director of House Buyer Bureau: “While there’s no need to buckle up for a house price crash, we can confidently expect property values to decline quite significantly over the coming year, with a double digit decline unlikely, but certainly not out of the question. We’ve already started to see a weakening of the market due to the combined pressures of high inflation, lower wage growth, and rising interest rates putting massive pressure on household budgets."
Chris Heath, managing director of Cube Homes: “I think we could see house prices drop by as much as 10% from the peak last summer, whether that all happens in 2023 or over the course of the next two years I am not sure yet. However, what I don’t see is a drastic collapse of the property market, I think it’s more likely to be more of a gradual dip. Despite mortgage rate rises and the cost of living crisis, people will always need to move home at key times in their life - when they get married, have kids, get divorced or buy their first property.
“Despite all the scaremongering there are signs the economy is stabilising a bit – the pound has risen against the dollar and the price of diesel on the forecourts is starting to fall, so it definitely isn’t all doom and gloom despite what some commentators are saying. I do think some people are capitalising on the unstable market to put prices up much more than their costs have risen, and that kind of profiteering is very disappointing especially when it hits smaller businesses on tighter margins like ours.
THE PRIVATE RENTAL SECTOR
Lorna White, lettings manager at George F. White: “Due to rising interest rates and a general increase in the overall cost of living, many landlords will find themselves forced to increase the rental price of their properties. While this will obviously impact new lettings, many landlords are also having to look at the rates for existing tenants too, who’s rental costs over time may have fallen below current market rates.”
Marc von Grundherr: "As for the rental market, we’ve seen values climb consistently higher over the last year and with a shortage of stock continuing to be a burning issue, we can expect the cost of renting to climb by a further 10% in 2023.”
James Forrester, managing director of Barrows & Forrester: "We [...] expect rental values to remain robust, climbing by between five to eight per cent. 2022 brought further proof that the government remains intent on attacking the nation’s landlords, with changes to capital gains tax thresholds. I expect that the one time they show any sort of backbone when it comes to delivering on housing policy, it will be with regard to Section 21 notices, further reducing the power of landlords when it comes to safeguarding their own investments. As a result, we expect many more will reconsider their future in the sector, further reducing supply to the detriment of the nation’s tenants."
PROPTECH
Justin Lau, CEO of Property Raptor: "There will be a lot more automation of daily repetitive tasks and beginning to see more AI in product offerings. While many of these may not eventually add enough value to an [estate] agency right now, 2023 will be an inflection point of more agencies adopting AI and automation integrated throughout their enterprises”
Jeremy Heath-Smith, CEO of Spike Global: “Companies that have not yet embraced using digital technology to reach their audience are operating behind the curve. The big question for developers and BTR operators in 2023 is how to continue to remain attractive to customers within an increasingly competitive market. The ability to offer residents extra benefits goes a long way. By offering an easier way for them to manage their tenancy and enabling them to get the most out of where they live, will help developers to attract and keep residents. With the new additions to the safety act coming into force in October 2023 developers and building management companies will need to be able to efficiently communicate with their tenants and for the tenants to easily access information."
CONVEYANCING
Lloyd Davies, managing director of Convey Law: “I think it’s going to be a slow start to 2023. Conveyancers will get quicker hopefully and transaction timelines will reduce as the capacity numbers subside, bringing us back to four months as opposed to five from offer to completion. Transaction numbers and the gloominess will lift towards the summer as interest rates and lending stabilise and the Government look to lift the economy again before the General Election in May 2024.”
REGULATION
Simon Cox, founder and managing director, Walter Cooper: "My main concern for the new year is, as always, issues in the planning sector. The government’s recent housing targets announcement has left me feeling less than optimistic about the state of local planning departments in 2023. The number of new developments which currently achieve timely planning permission is limited to say the least, and without a clear housing target in place and councils now having the ability to reject these targets entirely I can’t help but feel these levels will decrease further. Those councils already overrun by nimby attitudes will have now have an excuse to limit growth and development with little to no repercussions.
"On the whole, given the state of the country’s economy at the moment I don’t see housing being top of any government agendas for the near future leaving the market to tick along steadily, albeit slightly slower than previously, with limited major changes predicted for the foreseeable.”
Stuart Collar-Brown, co-founder and director, My Auction: "Earlier this year the government set out a whitepaper with plans to create a ‘so-called’ fairer private rented sector for tenants. The plans include tighter rules which will prohibit landlords from evicting tenants unless they plan to either sell the property or move into it themselves. This leaves private landlords stuck between a rock and a hard place and will eventually discourage many from investing. The Governments proposed white paper also wants to abolish fixed term tenancies meaning, landlords will no longer be able to sign-up tenants for a 6 or 12 month period. This means all tenancies will be held on monthly rolling contracts – another reason why many landlords will exit the market. In a time when borrowing will stop many from being able to buy a property, the level of housing available could dwindle down to very worrying levels."
