Although the property market came to a virtual standstill during the early part of the pandemic, once lockdowns and restrictions started to ease, things took off in a big way.
In a relatively normal year, there are around 1.2m property sales. But in 2021 there were c.1.5m transactions, with roughly 1.35m in 2022, and the heightened demand continued to drive up property values over this time, with many regions reporting rises well into double-digits.
Since then, although month-on-month figures have revealed a slowdown in annual growth, it is still in positive territory. In the 12 months to January this year, the UK House Price Index shows average sold prices went up overall by more than 10% - although that was boosted by cash purchases, with those purchases requiring mortgages only showing around a 2% annual rise. Meanwhile, Rightmove reported asking prices up by just over 6% in the year, so most homeowners will have seen their equity grow pretty well since 2020.
However, demand is predicted to fall back significantly this year, due to the various economic pressures driven by inflation and the uncertainty around global events, including food production and the potentially escalating war between Russia and Ukraine. With the cost of living continuing to rise more quickly than many people’s salaries, moving home has dropped down the list of priorities and prominent market forecasters are expecting average prices to drop by somewhere between 5% and 10% by the end of 2023.
Although it’s nobody’s dream to sell in a falling market, with fewer buyers out there and plenty of sellers who will be trying to hang on for what they believe their home is ‘really worth’, a realistically priced property should attract good interest. And if you happen to have a more individual style of home – the kind of thing that doesn’t come up for sale every day – it’s still likely to sell well, despite what the market averages might say.
For buyers, less competition for properties means it’s generally easier to secure a discount from the advertised price, especially if the vendor is highly motivated to sell. And if you’re trading up the ladder, although you might not get quite as much as you want for the home you’re selling, it’s important to recognise that the same percentage discount on a more expensive property means a better value deal in terms of the amount of money you have to spend!
And that’s why 2023 could be a great year to buy a bigger, more expensive property – as long as you’re able to comfortably finance the purchase. If you’d like to check the latest mortgage rates and deals, you can always speak to our partners at Mortgage Scout for a free initial consultation.
As long as you don’t need or want to sell within the next couple of years, there shouldn’t be any need to worry about falling prices. The predictions are that, although transaction numbers are likely to remain lower than average at around the 1m mark in 2024 and the average price change will be somewhere between -5% and 1%, we should see a return to stability the following year.
By the end of 2025, it’s expected that price growth should be 2%-4% and transaction levels back up at around 1.2m, with increased annual growth of anything up to 7% in 2026.
So, for those trading up, if you can secure a discount on your purchase of at least as much as you had to take on your sale, you should find yourself in a comfortable position equity-wise within the next three years. And if you can find a motivated seller this year, who really needs to secure a sale as soon as possible, you may be able to buy a bigger and better property than you could afford in any other year!
To find out what’s currently available in your location and make sure you’re one of the first to hear when new properties hit the market, get in touch with your nearest branch and have a chat to one of the team. If you have a property to sell, we’ll be happy to provide you with a free market appraisal.
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