January 11, 2023 5:12 pm

Insert Lead Generation
James Nicholson

UK Housing Marketing Prediction 2023? 2022 has been a year of change in the property market, with strong house price rises at the start of the year and two consecutive drops at the end. It’s no secret property prices have dropped in the last two months. Investors have had a tough time the last few years with prices rising so fast it was hard to find good deals.



Now the tables have turned, now is the time for cheap houses in the UK. So how cheap will property become in 2023?


According to Credit Suisse, the rising cost of mortgages will squeeze households in 2023, as payments rise to the highest level since 2009.



Why are UK house prices so high?


Fueled by a post-lockdown purchasing frenzy, the average UK property price hit a record £275,000 ($315,474) in December, a £27,000 increase over the previous year’s peak. People buying their first homes benefited from tax breaks, and although though homes were more expensive, low mortgage rates kept monthly payments affordable.


According to data from Nationwide, a major mortgage lender, prices have climbed every year since 2012, when they fell by 1.1%. Now, that boom is ended.


Mortgage rates in the United Kingdom have been growing in unison with interest rates since the spring. But Truss and Kwarteng’s “mini” budget of Sept. 23 kicked those increases into overdrive.


“The mini budget increased mortgage rates by a whole percentage point,” said Richard Donnell, executive director of research at online property portal Zoopla.


The promise of massive tax cuts but no strategy to pay for them triggered a bond market meltdown, raising borrowing prices for lenders. “The rapid rate of change in mortgage rates had the most immediate impact,” said David Hollingworth, associate director of communications at broker L&C Mortgages.





The September Mini Budget caused a house price projection of a decline by a stunning 20%. But property market predictions in the UK have been less spectacular since:


  • Lloyds Bank predicts an 8% drop in house prices in 2023 and has set aside £668 million to cover ‘bad debt,’ which could occur if borrowers have trouble completing repayments due to increasing mortgage expenses.


  • According to Zoopla, all of the key supply and demand indices it monitors ‘continue to hint to a dramatic downturn from very robust market circumstances. We see no evidence of forced sales or a large, double-digit reset in UK housing prices in 2023. We still anticipate a 5% drop in housing prices in 2023.


  • Rising mortgage payments and the cost of living problem will push house prices down by around 8% in 2023, according to an estimate by Halifax.


  • According to JLL, housing prices in the United Kingdom will fall by 6% in 2023.


  • While property specialist and buying agent Henry Pryor predicts that house prices will gradually fall by 10% by the end of 2023.



Interest rate forecasts

According to Capital Economics research,

  • In the second half of 2023, the Bank of England’s base rate will reach around 5%.


  • This might in turn boost average mortgage rates north of 8% (although still historically low, it is more than quadruple the 1.6% rate recorded by the end of 2021)


  • Based on this data, Capital Economics has expected house prices to grow throughout 2022, before decreasing by 5% in 2023.



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