There is just one question on every property buyer, foreign investor and estate agent’s mind: what can we expect from the UK property market in the second quarter of 2023? The first quarter of 2023 has already passed, and given the rising rate of mortgage, the increasing rate of inflation, the lack of buyer demand coupled with the decline in property sales, as well as the lack of supply and the lack of affordability, it is safe to say that all eyes are now on the UK property market. So, what can we expect from the UK property market in 2023? Is May going to be the month when the UK property prices finally tumble in 2023?
According to estate agents in Doncaster, traditionally speaking, the second quarter of the year is the most active part of the UK property market. This three-month cycle is when buyer interest pique and house sales rise. Usually, in the UK property market, May and June are two of the best months in the market with the level of market activity peaking by mid-June. If that is deemed to be true, then we should expect a spike in property sales in May 2023. However, the volume of sales will depend on various factors such as supply and demand, mortgage rates, interest rates and most of all, asking prices and selling prices.
With that being said, some experts disagree with the typical cycle working in 2023. Selma Hepp, the chief economist for CoreLogic believes that this year could be different. There are two main reasons according to her; first, there are some concerns regarding the rising rate of inflation, the increasing cost of living and some bank failures, and second, many sellers and buyers tend to wait things out during uncertain times. Developments in the UK property market as well as the financial market, the uncontrollable rate of inflation coupled and the increased cost of living could take their toll on the buyer. In such a scenario, income growth could slow down which means that the consumer will not have the additional spending power to purchase a house. According to Dennis Shirshikov, a real estate strategist, the uncertainty in the UK market, be it the financial market or the property market, makes it very hard to predict what will happen to the housing market in 2023. He believes that if there is swift action taken to control the rising inflation and if banks are willing to rethink their interest rates, then the level of activity in the housing market could pick up. Simply put, if mortgage rates reduce, buyer demand could increase. But does that mean property prices in the UK may tumble in 2023?
The annual house price inflation rate in the UK has currently slowed down to the lowest it has been in the past 10 years. According to Halifax, the average price of property in April 2023 was just a mere 0.1% higher than the average price of property in April 2022. Yet, the annual house price growth in the UK slowed down by 1.6 per cent as of March 2023. If we compare this average price growth from a month-on-month perspective, the average price of property in the UK decreased by 0.8 per cent in March and then 0.3 per cent in April. However, it is important to note that the average price of property in March 2023 is still higher than it was in March 2021, almost £28,000 higher. But, considering the average price of property rose dramatically in the second quarter of 2022, the current numbers show a £7,000 fall in prices. This is due to the rising rate of inflation and high mortgage costs, and it could also be offset by the mini-budget.
But will the prices tumble drastically in May 2023? Most experts believe that is highly unlikely. The current market prices show no sign of tumbling. So, what should we expect from the UK property market? The UK property market has been resilient and experts believe that it will stabilise again. As mortgage rates are stabilising, the buyer demand will increase and so will the supply. As the demand and supply continue to increase slowly, buyers and sellers will have to adapt to the ongoing market conditions.