There’s been a lot going on in the housing market this year. We started 2022 with months of record-breaking house price increases, huge levels of demand from buyers, and homes selling more quickly than ever before.
As the year progressed, we started to see the market settle down after an exceptionally busy two years, and were returning to the kind of housing market we’d seen in the years prior to the pandemic.
And then interest rates started to increase, and some buyers put their moving plans on hold as mortgage rates also climbed.
So how could the events of 2022 affect the property market next year? Here’s how things are looking right now.
What could happen to house prices in 2023?
This year we saw asking prices in Great Britain rise by 5.6%, to an average of £359,137. This was almost £17,000 higher than in 2021, when prices increased by 6.3%.
In 2023, we’re forecasting that average asking prices will drop by 2%, which means prices will still remain higher than they were after the incredibly busy home-moving period of 2021.
One of the main drivers of the house price growth we’ve seen over the past two years has been the imbalance of supply and demand, with far more people looking to move than there were homes available for sale. And in a more settled housing market, buyers will have the time and space to make sure they find the right home for them. As a result of this, we anticipate the time it takes to sell a home increasing to what we’d expect to see in a more ‘normal’ housing market, of around 60 days.
Our property expert, Tim Bannister, says: “After two and a half years of frenetic activity, it’s easy to forget that having multiple bidders immediately lining up to buy your home was the exception rather than the norm in pre-pandemic years, and there will be a period of readjustment for home-movers as properties take longer to find the right buyer.”
So what will this mean where you live?
Our house price forecast is based on a national average, so we expect that prices in some pockets of Great Britain to outperform others. This is because house price changes vary across the country, with lots of smaller, local markets affected in different ways. For instance, price growth in an area could vary from street to street depending on the types of property available, the desirability of the location, and buyer affordability.
You can find out how much the average asking price currently is where you live in our December House Price Report.
Are people still looking to move?
After the uncertainty brought about by interest rate rises and high inflation, we’re seeing signs that some buyers are ready to get started with their home moves as we head into the New Year. This month, views of homes for sale on Rightmove are up 11% when compared to the same period in 2021, suggesting that 2023 moves are on the cards for those who are able to do so.
Our property expert, Tim Bannister, says: “We’re heading towards a more even balance between supply and demand next year, but we don’t expect more significant price falls in 2023. This is reflected in our prediction of a relatively modest average fall of 2% next year.”
What are estate agents saying?
Guy Gittins, CEO at Foxtons, says: “2022 has certainly been a year of two halves. We started the year still riding the wave of momentum from peoples’ changing requirements following Covid. As interest rates started to increase the market in London paused to catch its breath, and in the weeks that followed, we saw buyer demand fall sharply.”
However, there seemed to be a strong number of buyers who had factored higher rates into their budget and were still determined to transact,” he adds.
Rob Kennedy, Director at Philip James Kennedy in Didsbury, says: “The month of December is a good market barometer as we register the most proactive buyers who are planning on moving in early 2023. Whilst there are less viewings and new instructions in December, we encourage as many new sellers as possible to launch their properties mid-December, as they enjoy high levels of internet activity with clients watching video tours and considering moving over the festive period.”
“This culminates in one of the most popular property search days of all which is Boxing Day, where you definitely want your property to have a presence. These are the properties that will attract the first wave of viewing activity in January and sell first.”