Winter Market Report: Market recalibration underway
Taking a look at how the market has changed since last year and what to expect this Winter season.
Price moderation and a sales slowdown are likely over the coming months but should be considered in the context of economic history, the frenzied post-pandemic market and the longer-term outlook.
This is according to Member of The Guild of Property Professionals, Adam Mackay from Mackay Property and Mackay Bespoke in Sawbridgeworth and Bishop's Stortford, who adds that the Autumn Statement provided a sobering assessment of the UK economy, however, forecasts for the housing market are less dramatic than during 1989-1993 and the Global Financial Crisis in 2007.
“It is expected that Inflation will peak during the final quarter of 2022 before falling back over the course of 2023, and unemployment looks likely to remain lower than the 10-year average of 5.3%. The Global Financial Crisis, caused by banks lending more than borrowers could afford to pay, led to the more stringent mortgage lending criteria imposed since 2014. Today, only an estimated 4.2% of homeowners have less than 10% equity in their home,” says Adam.
He adds that annual price growth in the UK has moderated back from the double-digit price growth that has epitomised the market in recent months, with all major indices placing growth firmly in single digits as the year draws to a close.
“At 7.2% in the year to October, annual price growth remains considerably stronger than the 3.3% average between 2010 and 2019. Since June 2020, average property prices have risen by close to £50,000, the equivalent of 24%, with lockdown and lifestyle changes spurring the market,” Adam comments.
“Single-digit price correction is predicted for 2023/2024 before price growth is anticipated to return in 2025. Buyers will continue to benefit from the 0% rate of stamp duty up to £250,000 until March 2025. With almost one in three movers ‘needs-based’, such buyers will present sales opportunities. However, realistic pricing for market conditions will be paramount to achieving a sale as the market recalibrates.”
He notes that except for 2021, this year is set to be the busiest market since 2017.
Zoopla estimates there are around 293,000 sales currently in the pipeline to be completed before the end of 2022. “Sales volumes are predicted to be around 1 million in 2023, a level more on par with the pre-pandemic norm. October saw a 13% uptick in new supply to the market compared to a year ago, although stock levels remain low by historic standards,” adds Adam.
Looking at regional activity, across East of England, the time taken to sell a property has nudged upwards over the past month. However, at 40 days it remains considerably less than 60 days in October 2019. Fenland and Central Bedfordshire are currently the most active property markets in the region.
The initial results from the 24th official census, the first ‘digital’ census of England and Wales, report that both the population and number of households in England and Wales rose by just over 6% in the decade to 2021. The population grew by 3.5 million and the number of households by 1.4 million. In East of England, the number of households increased by close to 206,000 and the population by close to half a million. Early 2023 will see the release of new census information reflecting how the number of private dwellings across the region has changed.
“There is no doubt that 2023 will inevitably prove a very different housing market to 2022, but there will still be buyers who need to buy, and sellers who need to sell. Over the longer term, forecasts for growth remain positive,” Adam concludes.
Read the full report at: www.mackayproperty.co.uk/market-report