By Jon Whitehead
With all the negativity in the air at the moment, one question keeps popping up:
How is the cost-of-living crisis affecting house prices and what is the outlook for 2023?
The truth is, that at the time of writing this (October 2022), house prices have remained relatively stable, but what we have noticed is that buyer levels have dropped off significantly and houses are now taking longer to sell. Twelve months ago, we would have 20 to 30 viewings on a property with a possible 5 buyers for each house we marketed. In some cases, we would have to close the book and not allow any more viewings, or in extreme cases remove the house from the market altogether to stop the phone calls! Houses would also be selling in 24-48 hours 75% of the time.
This was a crazy time for all estate agents, and to be honest we didn’t really enjoy it. It was great selling lots of houses, but the satisfaction of ‘selling’ a house, being proactive and negotiating prices all but disappeared. We also took the brunt of the anger from frustrated homebuyers that couldn’t view the properties they wanted or had offers rejected time and time again.
The current market is much more like pre-covid times, which is a lot better us and for buyers. You can actually view the properties you want to see and also have a chance of having your offer accepted without having to drastically overpay.
Things that are having a negative effect on the market:
- Higher interest rates
- Lenders pulling products without any notice
- Higher fuel prices and utility bills
Things that are having a positive effect on the market:
- New stamp duty regulations
- More choice for buyers as property takes longer to sell
- House prices remaining steady
So why haven’t prices started to drop yet?
House prices have not dropped as there is still very high demand relative to the amount of properties on the market. It’s going to take a while for current buyers to find a property, and it’s only when interest levels drop off that reductions may start to happen.
Outlook for 2023?
This very much depends on events worldwide and government policy / intervention, but with interest rates predicted to rise and an ongoing inflation issue, I think prices will either completely flatten out or fall by up to 10%.
The need to move should continue to be as great as ever. Some people will choose to downsize to save money as they come off their fixed rate mortgage terms and face the higher cost of living, whereas others may wish to upsize for growing families, some will simply need to move due to schooling, work, divorce or death. Whatever the reason, I believe the housing market will continue to move, albeit at a slightly slower pace throughout 2023.