UK House Sales Predicted to Dip 23% in 2023: What's on the Horizon for the Property Market?
The Market's Rocky Road
The UK property market has weathered a tumultuous period, and according to the latest report from Zoopla, it appears the road ahead might remain bumpy. The analysis indicates that house sales in 2023 are anticipated to plummet by 23% compared to the prior year. While this forecast may raise concerns, there's more to this story.Sales Slide and a Tumultuous Year
The property sector has had its share of challenges. UK house sales are expected to hit 1 million this year, a notable 23% decline compared to the thriving market of 2022. Zoopla suggests that this number might remain relatively steady in 2024, with a potential upswing if mortgage rates dip back towards four percent.
A Glimpse at Falling House Prices
Zoopla's report doesn't stop at sales projections; it also delves into the territory of house prices. In the coming year, they predict a 2% decline in UK house prices. The silver lining in this forecast is the hope that rising incomes will gradually restore housing affordability.
The Culprits: Rate Rises and Reduced Buying Power
What's causing this dip in the property market's health? Analysts point to the consistent interest rate increases from the Bank of England, resulting in higher borrowing costs that have cooled off demand and reduced buying power. This has led to a swift cooling of house price growth, which has shifted from a robust 9.2% growth a year ago to a -1.1% downturn today.
A Bittersweet Perspective
It's worth noting that, despite the fall, house prices still remain roughly £40,000 higher than their pre-pandemic levels when remote workers with disposable income were eager to join the property ladder.
Richard Donnell, executive director at Zoopla, sheds light on the situation: "Modest house price falls over 2023 mean it’s going to take longer for housing affordability to reset to a level where more people start to move home again."
He goes on to explain that while income growth is finally outpacing inflation, mortgage rates have remained at around five percent or higher. The forecast suggests that house prices may see further small declines, averaging around two percent, throughout 2024, with an estimated 1 million home moves.
Hope on the Horizon
Amidst these challenges, there's a glimmer of hope. Donnell believes that slow house price growth and rising incomes over the next 12-18 months could improve affordability, potentially reaching levels last seen a decade ago. This, in turn, could set the stage for a rebound in home moves as consumer confidence returns.
The property market may be navigating some rough waters, but with evolving economic factors and resilience, it may yet find its way to calmer seas.
