This is according to Nicky Stevenson, MD of Fine & Country UK, who adds that looking at reports from the major portals, property trends are heading back to those last seen in 2019, and there are signs that the so-called “race for space”, which has epitomised the market in recent times, has run its course.
Nicky explains: “London returned to its top spot as the most searched-for location in 2022, and while levels of new buyer demand faltered as 2022 drew to a close, in affordable and accessible urban areas demand is firm. UK price growth remains in positive territory, however, Nationwide report the annual rate of growth fell for the fourth consecutive month in December 2022, to 2.8%, with month-on-month prices dropping by 0.1%."
Looking at the prime markets, Stevenson says that across England and Wales, annual price growth remains positive in all regions, although there is evidence of a North/South split in fortunes compared to a year ago. “Annual price growth has moderated significantly across the North and the Midlands, while annual price growth in prime markets across the South and London is currently stronger,” she comments.
According to Stevenson, the market in 2023 is set to favour the buyer, although buyers who transact in 2023 will undoubtedly be more cautious and more price sensitive than in recent times.
She adds: “Realistic pricing from sellers for market conditions will be crucial to achieving a sale. Rightmove reported that at 2.1%, the fall in newly-listed prices in December was higher than usual, and Zoopla report that the proportion of properties selling with a price reduction is on the rise. With less competition in the market, the time taken to sell a property is edging upwards in all regions except London.
"However, at 45 days in November, it remains considerably lower than the 67 days recorded for November 2019. Discretionary purchasers have dominated the market in recent times and needs-based buyers are set to assume a higher proportion of sales this year,”
She notes that affordability, both in terms of household costs and mortgages, will undoubtedly impact the market of 2023. UK Finance anticipates that the number of house purchases will fall by 21% in 2023 to just over 1 million, while lending by banks and building societies will return to pre-Covid levels.
Stevenson says: “Mortgage rates for home movers start 2023 lower than in recent months, with a number of fixed-rate deals below 5% available for those looking for a loan-to-value below 75%. However, fluctuations in the Standard Variable Rate are still evident, the Bank of England having raised the base rate to 3.5% in December.
"Latest forecasts from HM Treasury indicate the official bank rate will be 4.3% during the final quarter of 2023. Rates for first-time buyers remain at over 5%, based on a 90% loan-to-value, with research by the Yorkshire Building Society indicating that there was a 9% fall in first-time buyer numbers year-on-year in 2022.
She concludes: However, this market still accounted for 52% of all property purchases with a mortgage, up from 41% a year ago. The recent announcement of the extension of the Mortgage Guarantee Scheme until the end of 2023 will prove beneficial to this sector.”
