Positive signs from the January market, following confirmation of a dip in December
December’s property sales decline may have been confirmed by the latest government data, but brokers with their feet on the ground say that buyer interest remains – although sellers are finding they must accept offers below their asking price.
Graham Cox (pictured), founder of the Bristol-based broker Self Employed Mortgage Hub, said that while mortgage and housing market fundamentals have changed radically over the past six months, he has still seen reasonable levels of buyer interest so far this year.
Cox added that some sellers are still holding out for unrealistic ‘top dollar’ prices, however he believes those vendors will not be able to sell unless they get very lucky or have an exceptional property.
“My prediction is a 15% to 20% fall in house prices this year, with a peak to trough decrease of around 30%. Until sellers accept the new reality, transaction volumes will remain under pressure,” he said.
House prices: could the worst be already over?
Zaid Patel, director at London-based estate agents Highcastle Estates, said that January was an interesting month, despite the release of HMRC’s monthly property transaction statistics showing that property sales were down in December.
“The first week was fairly quiet, then all of a sudden plenty of offers came in and those offers were being accepted,” he said.
Patel said that all the offers were accepted at around 5% to 10% below the asking prices.
Dean Esnard, director at London-based Magni Finance, said though transaction levels are currently below what we are used to, there is growing optimism in the air.
Esnard noted that lenders’ rates have been coming down almost as quickly as they increased, so it feels like the worst is over.
Despite inflation dropping slightly, he believes the base rate is likely to rise again next month – but he added that lenders will have already priced this into current fixed rates, which are slowly nearing the 4% mark.
“These rates will keep the property market afloat and, with pent-up demand, I would not be surprised if house prices started to increase again at some point in 2023,” he said.
Demand for housing remains
Justin Moy, founder at Chelmsford-based mortgage broker EHF Mortgages, said that while transaction levels dropped during the closing stages of last year due to the ripple-effects from the mini budget, there are still buyers out there.
“The alternative of private renting costs just as much as a mortgage payment, so if the deposit can be sourced, then there will continue to be a decent level of transactions this year,” he said.
Moy does not believe 2023 will be a record year by any means, but he expects for it to be busy enough.
“There is a greater acceptance among the public that property prices in 2023 will stagnate or reduce, and that mortgage rates will hover around where they are in the short to medium term,” he added.
Amit Patel, adviser at Welling-based mortgage broker Trinity Finance, also said he expects the housing market to pick up over the coming months and deliver opportunities for savvy buyers and investors.
“I expect prices will dip by around 8% overall in 2023,” Patel said. “No doubt the Bank of England will increase the base rate again at the next MPC meeting to curb inflation – which is something that I do not agree with.”
Are you expecting to see residential transactions volumes pick up in 2023? Let us know in the comments below.
