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posted 8th February 2023
The property market in the United Kingdom showed a slowdown in growth during the fourth quarter of 2022, with most regions registering small price decreases. This led to a decrease in the annual rate of house price inflation, which was recorded at 6.5% at the end of the year. It is down from 8.3% at the end of 2021. The drop in growth was due to a 50% decrease in buyer demand in the final months of 2022.
However, demand for homes has rebounded in the early weeks of 2023, reaching levels in line with pre-pandemic years and 10% higher than in 2019. The rebound in demand can be attributed to the return to normal activity levels after the exceptional years brought on by the pandemic. Despite this rebound, the start to 2023 is expected to be slow, with potential homebuyers waiting to see how the market will develop in the coming months.
The supply of selling housing has also increased, which has boosted choice for would-be buyers and reduced upward pressure on home prices. The number of selling homes remains 6% below the 5-year average, with an average of 23 homes for sale, up from a low of 14 homes in early 2022.
One trend to note is that buyers are becoming more value-conscious in response to the impact of higher mortgage rates on buying power. This has led to a shift in demand towards flats. There are 27% of new buyers looking for 1-bed and 2-bed flats, which increase of 22% compared to the previous year. In contrast, demand for 3-bed houses has declined 5 percentage points to 39%.
The outlook for the property market in 2023 will depend on a number of factors, including the economic outlook, the strength of the labor market, consumer price inflation, and interest rates. Realistic pricing will also be a key factor in determining sales volumes, with homeowners being encouraged to price their homes competitively in line with local market conditions.
In conclusion, while the property market in the UK showed a slowdown in growth in the fourth quarter of 2022, demand has rebounded and is expected to improve further in the coming months. Buyers are becoming more value-conscious, leading to a shift in demand towards flats, and the increased supply of homes for sale has boosted choice and reduced pressure on prices.
