Conditions in the property market in 2023 were always likely to be challenging, such was the economic turbulence of 2022. It was also inevitable that the double-digit price growth of 2021 and 2022 could not be sustained. To date, however, the market has proved resilient, with many metrics indicating a return to a more normal tempo. Here are 10 things to know.
1. Many owners are still reluctant to sell their home for less than they believe it to be worth. But those who do opt to sell are not being forced to significantly downgrade their expectations: in April the average home sold in England & Wales achieved 99.0% of its asking price. This may be lower than at the peak in April 2022, when the average home changed hands at 101.2% of its asking price. But it is still the highest proportion recorded for any April pre-2021 and up from the 95.4% recorded in April 2009 when prices were falling. Last month the average home marketed at £1 million or more achieved 97.4% of its asking price, up from 95.4% in April 2019, and again, the fourth strongest result for any March since 2009.
2. The impact of the Autumn 2022 mini- Budget continues to weigh on the time that it takes to sell a home. In April this was an average of 51 days, which is 23 days longer over the same period last year. Last month 28% of the homes that found a buyer had been on the market before the start of the year. This compares with just 17% in April 2022.
3. Higher mortgage rates are limiting how much buyers can afford and are prepared to pay. This is the reason why 51% of homes that changed hands in April had been reduced in price, against 32% in 2022. However, this figure is likely to fall gradually in the coming months given that more of the homes for sale in Spring had come onto the market priced for 2023.
4. Competitive pricing ensures a faster sale: 13% of homes that came onto the market with Hamptons in March sold within a week. This is the second highest share on record and compares with 11% in March 2022 and just 5% in March 2019.
5. Cash buyers are the most powerful force in the market right now, accounting for 34% of sales in the year to date. This is the highest proportion since 2016. These are likely to be downsizers who have paid off their mortgage or households who have taken out discretionary mortgages in recent years and taking advantage of cheap borrowing.
6. First-time buyers are also still managing to climb onto the ladder - despite higher interest rates – making up a surprising 27% of buyers. They are opting for smaller homes in more aff ordable locations. 2023 marked the first time in over a decade whereby most first-time buyers purchased one and two bed homes, rather than larger properties.
7. More downsizers are emerging to make their first post-Covid move. Downsizers tend to favour slower markets which allow them to line up their next home before selling their current property. The average seller has been in their property for 14.3 years, against 13.5 years in 2022. As many as 32% of those who have listed a home this year last moved 20 or more years ago, compared to 27% in 2022. On average this group are selling their homes for £292k or 355% more than they bought for, and are often releasing some equity.
8. Those who bought within the last five years are largely staying put. This is potentially a reflection of the market having peaked last year. That said, they’re still advertising their properties for £77k or 30% more than they originally paid on average. Although, strong house price growth has made trading-up particularly costly.
9. Interest rates may have peaked with the Bank of England reportedly close to the end of its rate-hiking cycle. Mortgages rates which rose sharply in the wake of the mini-Budget could start to decline from their current level of 4-5% towards the end of this year.
10. Last year the ONS house price index showed that house prices were rising faster than flat prices in every local authority in the country. However the difference is narrowing, and in March, there were seven local authorities, predominantly in London, where flat prices were rising faster than house prices. We expect this number to continue rising over the course of 2023.