Housing Market – Predictions for 2023

As we say goodbye to 2022 and usher in a new year, all eyes are on the housing market. What will happen in 2023? I’ve compiled expert analysis with my own assessment to give my personal housing predictions for 2023.

Mortgage rates

There are some experts who think that cheaper mortgage rates in Q1 will help the market achieve a “soft landing” in 2023. This means that instead of a crash, the market will experience a slower, steadier decline across the year.

Mortgage rates have recently returned to pre-mini-budget levels, which should make it more affordable for potential buyers to enter the market in the short term. However, the expectation is that the Bank of England base rate will reach 4.5% this year (up from the current 3.5%) so this will be reflected in mortgage rates as the year progresses.

All this being said, solid income growth (with wages increasing at around a 7% pace in the private sector) and weak or negative house price growth could also improve affordability. It’s a mixed bag, with plenty of uncertainty as we head into a new year. As always, speaking to an Independent Financial Advisor is a good idea, to clarify your own personal position.

House prices

House prices have been cooling over the last 3 months or so, as the usual seasonal stagnation was made worse by the mini-budget in September. As mortgage rates stabilise, we will see affordability return to the market, although confidence still remains patchy as some property types outperform others.

Flats and semi-detached homes in Horsham increased by 22% and 19% respectively between October 2021 and October 2022. However, following the ‘race for space’ brought on by the pandemic, detached homes averaged out at -4% for the same time period as demand fell for this type of home.

Experts now predict a market correction of between -5% and -8% in 2023. However this will vary across the country. In March 2020, as the pandemic took hold, the average house price in Horsham was £378,212. Today it stands at £446,660, an increase of 15.3%. So, prices are not expected to fall below pre-pandemic levels by a long way.

Unemployment

Another factor that affects the health of the housing market is the unemployment rate. Most experts predict the unemployment rate will rise towards 5% in the coming years; still low by historical standards. However, it is difficult to get a true reading of unemployment rates in today’s labour market thanks to the rise in zero hours contracts.

Summary

There are many factors in play when it comes to moving home during a time of uncertainty. Be sure to choose a property expert who is willing and able to navigate you through a complex landscape, and who isn’t afraid to be realistic. If you are looking for an estate agent in Horsham that gives that extra personal service, then contact me today for an honest, open chat about your personal situation. No pressure. No tactics. Just great advice.

Hayley Georgiou is an independent real estate agent based in Horsham, West Sussex. She has over 15 years’ experience in sales & marketing, and offers property sales, lettings, and a home buying service. Her agency is built on the values of honesty, transparency and excellent communication every step of the way.