House Price Index Report – January
In the fourth quarter of 2022, the average house price in Wales rose to a record high of little over £249,000. This is true even if yearly price increase slowed in Q4 to 9.9%, just below the rate of inflation, and quarterly price growth slowed to 1.3%. Sales were also down by about 5% compared to the same period in 2021. In spite of increased interest rates, stagnating wages, and cost-of-living pressures, hose prices are predicted to move downward.
In contrast to prior years, 2023 will get off to a slower start. Some families planning to relocate in the upcoming year may wait to see if home prices start to decline more swiftly, along with how much more mortgage interest rates are presumably going to decline.
Mortgage rates for start-up companies are currently typically below 5% and are anticipated to stay in this level in 2023. Compared to the 6% to 6.5% levels at the end of last year, this possibility is far better, but buyers will continue to be cautious over the coming weeks.
More options and less price pressure result from more supply.
The number of houses for sale has been steadily increasing, which is the other noteworthy development in recent months. The market in 2022 has a limited supply, which has contributed to the upward pressure on housing values. Although the number of properties for sale is still 6% below the five-year average, this is already turning around. From a low of just 14 residences in early 2022, there are currently an average of 23 homes for sale per estate agent.
A greater selection for prospective buyers and a lessening of the upward pressure on property prices are two benefits of increased supply. Unrealistic seller expectations are a major threat to sales volumes in the coming year. Anyone who is serious about selling their property in 2023 must make sure that the price is fair and in line with what prospective buyers are willing to pay in the neighbourhood.
Customers’ tastes are leaning toward apartments in early 2023
Buyers have become more value-conscious in reaction to the impact to consumer spending from increased mortgage rates, which is a clear trend from the first few weeks of 2023. There has been a noticeable change in demand away from 3-bedroom houses and towards apartments.
According to Zoopla research, 27% of new buyers are seeking 1 and 2 bedroom apartments, up from 22% a year earlier. The most highly prized residences in the UK are still 3 bed houses, while interest for them has decreased by 5% to 39%. Within the first few weeks of the year, we have noticed this pattern in every region of the UK. Demand for 1 and 2 bedroom apartments in London is increasing from 42% to 49% over the past year.
Outlook
The market prognosis for 2023 cannot yet be fully understood. Although the predictions for the economy has marginally brightened recently, the pressure on consumer discretionary incomes is still very significant and has a direct influence on sales activity. Despite this, the market is anticipated to experience some movement in 2023 due to the strain on salaries and rising housing expenses. Many homes may have significant amounts of embedded equity, which could stimulate further migration and downtrading to unlock fairness and lower energy costs, promoting home moves in 2023.
According to Zooplas most recent Value of Housing research, there are more than £10.5 trillion worth of properties in the UK. There is about £8 trillion in house equity in the UK, with a mortgage value of about £1.6 trillion. It is anticipated continued low single-digit price declines in the first half of the 2023 year, although the housing market is in better shape than in recent economic cycles to handle the challenges.
Wondering if this is the year for you and your family to move houses? Get in contact with one of our team members to advise you on your next move.
