You may have seen some of the news coverage about how property prices are set to fall in 2023.
You may have also seen conflicting opinions on exactly what any potential drop in prices might entail.
It can be tricky to separate fact from fiction – but one thing’s for sure: The market is certainly going to look quite different from what we’ve become used to over the past three years.
If you’re thinking of moving this year, all the talk of price drops, rising interest rates and mortgage affordability is probably quite daunting.
So, we’re here to let you know everything you need to think about if you’re planning a move this year.
Will house prices drop in 2023?
It’s fair to say there’s been a lot in the news about huge property price crashes in light of the government’s mini-Budget, rising inflation and pressure on mortgage interest rates.
But with the financial markets enjoying a far more stable end to 2022, the severe predictions have been replaced by far more measured suggestions on how the property market will fare in 2023:
- Rightmove predicts a 2% drop in prices
- Zoopla predicts prices will decrease by ‘up to 5%’
- Halifax suggests prices will fall by 8%
Because property prices grew so rapidly between the end of 2020 and mid-2022, even if prices were to fall in line with those predictions, they’d still remain above the levels from before the Covid pandemic.
So, while 2023 does look like producing a property market ‘adjustment’, talk of a ‘crash’ does now appear to be somewhat over the top.
What will happen to interest rates?
There’s no doubt rising interest rates have played a huge part in many buyers adopting a ‘wait and see’ approach before moving.
The Bank of England’s base interest rate rose from 0.1% to 3.5% in only a year and combined with the political and financial fall-out from the mini-Budget, many mortgage lenders hiked their rates at the end of 2022.
Predictions of mortgage rates as high as 6% were also made for 2023.
But these suggestions have now been played down by commentators, with rate highs of around 4.5% more likely and mortgage rates already starting to fall at the end of last year.
Banks need to make money by securing market share and are becoming increasingly competitive, so expect rates to reflect this.
What to think about if you’re buying or selling in 2023
- Get good mortgage advice
Selecting the right mortgage for your circumstances has always been important – but never more so given the rising Bank of England base rate.
Get good, solid, independent advice from a mortgage broker or financial advisor before you even start looking at mortgage product options. - Think carefully about waiting to buy
While it can be tempting to wait and see how much prices fall before committing to buying, this may not be the right approach.
Now could be the right time to buy if you’re ready to do so.
This is because the money you may save if you wait for property prices to fall could be wiped out if interest rates, and therefore mortgage rates, rise in the future. - Buy for the long term
It’s important to buy with a long-term view and purchase a property that’s future-proofed for several years while the market settles down.
So, by buying a home that will suit your needs for the medium and long-term, you’ll be able to navigate your way through the current uncertainty and then look again at your plans in the future once prices are rising and rates have stabilised. - Make use of your local agent
In times of property market uncertainty, it really pays to make use of local experts when you’re thinking of buying or selling.
When it comes to selling your home, in particular, the help of an Ellis & Co branch can be a game-changer.
Our local agents will know how the market is performing in the area you live and will be able to advise on the right asking price for your property based on statistical fact as well as experience.
Most importantly, they’ll also ensure that all interested buyers are pre-qualified and those who are able to progress are given priority.
This not only saves time, but also gives you certainty in an uncertain time.
New read…
Being prepared when selling your home can help to avoid many of the stresses that come with a big property move.
Our guide on the process of selling can help.
