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Despite fears of a property market crash in 2023, the market remains relatively OK. A recent report by Strutt & Parker suggested that the worst of the anticipated declines in the housing market may already be behind us. The information maintains its previous house price forecasts, predicting growth between -5% and 0% for the UK, and -3% to 3% for prime central London in 2023.
While signs point towards continued resilience in the second quarter of 2023, estate agents must be prepared to face a new reality. Homes may take longer to sell, offers may be lower, vendor expectations must be managed, and fall-throughs may increase. Consequently, if they are lucky, estate agents will have to work more for the same income.
The property market presents a mixed picture, with some markets experiencing increased stability and certainty, which could encourage transactions through the second quarter of the year. Here are some of the trends we can expect to see in Q2 2023:
Buy to let: Sales to landlords will likely decrease, and many ‘mom and pop’ owners may leave the market.
Demand for properties closer to stations: The return to commuting has increased demand for railway and well-connected properties, mainly flats. City centres have also seen a mini-resurgence.
Off-grid heating: The pressure on oil prices has eased, but they are expected to rise again. Off-grid heating is becoming less popular, deterring some buyers.
The space race is over: Country and seaside properties are returning to the market, as staycations are not as popular as they used to be. Rental rates have dropped, and some councils have increased the levy on second homes, making them financially unviable.
Less demand for home gym and office space: As many public areas have reopened, demand for home gyms and offices has decreased. Garden bars and hot tubs are also becoming less attractive.
EPC rating matters more: Buyers pay closer attention to EPC ratings, which can save money year after year, making them willing to pay more for a good rating.
Cladding: There has been a gradual softening in the avoidance of buying properties in larger blocks with potential cladding issues. With solutions on the table, buyers are once again looking at them.
Fewer new builds: With the Help2Buy scheme closing and builders slowing construction, developers will build fewer houses they cannot sell, and many non-prime sites will be mothballed.
Less tolerance for defects: Minor defects previously ignored are no longer acceptable. Surveyors scrutinise properties more closely, suggesting additional reports to investigate issues and down-valuing when in doubt.
Mortgages will remain less affordable than they were, and this will likely be around for a while. However, keen sellers taking lower offers will bridge the gap, and many people still intend to buy regardless.
Estate agents may shut down: Poorly performing branches will close, and estate agents unwilling to work harder to make a sale may find themselves out of a job. Many agents close to retirement will retire, and others will leave the sector.
The Bank of Mum and Dad to tighten lending: Parents may be less inclined to lend a deposit to their offspring when they see the value of property dropping. Those looking to use equity release or a new mortgage to fund their kids will be put off by higher rates and tighter lending criteria.
