Housing prices have increased rapidly over the last few years due to inflation, Brexit, and the pandemic, making it more difficult than ever for first-time buyers to climb onto the property ladder. Property values in the UK are at an all-time high in 2022. Rightmove reports that in July 2022, the average asking price for a home increased by 9.3% to £369,988.
Naturally, both potential buyers and current homeowners are anxious about this. What then lies ahead for the housing market? Will home prices decline in 2023, or can we anticipate a continuation of the housing boom?
Are house prices dropping?
The real estate market has exploded, driving up home prices ever since the last financial catastrophe in 2007–2008. A “race for space” that saw many families move up to larger residences outside of the cities was sparked by the stamp tax holiday and low inflation rates, which have also driven up house prices to record highs.
Buyers can no longer afford to invest as much in real estate due to rising mortgage rates, problems with new buildings, and the end of the government’s Help to Buy program. Thousands of households are struggling financially as a result of the cost of living problem, and many purchasers are hesitant to make significant purchases until they see how the property market performs.
For the first time since 2012, experts have predicted a decline in the housing market as a result of demand plateauing. Independent economic research firm Capital Economics has forecast that house prices will decline by about 5% between 2023 and 2024 as a result of rising interest rates. While they forecast a decline in housing prices in 2023, they also believe that price growth will remain robust in 2022. Savills has also predicted a decline in home prices in 2023, but they believe it would be much smaller, at 1%, and will be followed by several years of modest increase. This is partly because there is a dearth of dwelling supply.
Will there be a housing market crash in 2023?
Are we on track for a home market crash in 2023 now that we are aware of the causes of a downturn in the property industry? A decent year to buy a house is 2023, right?
According to what we’ve observed, a home market meltdown in 2023 is unlikely. Given how resilient the real estate market has shown to be, any imbalances between supply and demand will eventually level out. Even with rising interest rates, there is still a lot of uncertainty surrounding the housing market, which may make you less confident in your decision to wait until 2023 to buy a home.
Eventually, rising housing costs will result in homeowners making more money when they decide to sell. In light of this, buying a house is still the wisest course of action if you can. If you’re a first-time buyer seeking to buy a home, you might want to hold off until home prices decline so you can obtain a mortgage that won’t place you in a precarious financial situation.
Different people have different ideas about what the property market will look like in 2023. Several experts assert that home prices will eventually reach zero and point out that the UK is currently seeing a slowdown in some regions. Others concur, but predict that before falling once more, home prices will soar to new heights. Some have proposed a less dramatic scenario in which housing prices flatline and then slowly increase. You can read all about the different topics surrounding the current UK housing market from Housing Digital.
Unfortunately, there is no way to predict the future with certainty. What we do know is that home prices are unsustainable right now, and a market decline is necessary for more confident buyers to enter the market.