The UK property market has defied all odds and bounced back from the pandemic with an incredible surge in activity. From skyrocketing sales to soaring demand for rental properties, the market has been on a roll. However, as the temporary stamp duty holiday comes to an end soon and the possibility of rising interest rates looms, many are wondering what the future holds for the property market.
In this article, we’ll delve deeper into the current state of the market and examine what lies ahead for buyers, sellers, and investors. If you’re one of them, get in touch with estate agents in Manchester for a better understanding of the current landscape.
Overview
Despite a relatively strong performance throughout 2022, the UK housing market has recently experienced a slowdown in growth. This is due to:
- Rising interest rates
- Increasing energy and food bills
These factors have contributed to a reduction in demand for new housing, leading to a deceleration in house price growth.
The recently announced cut in stamp duty may not be sufficient to support the market, especially considering the continuing cost of living crisis. However, it remains to be seen how the market will perform in the coming months and whether any new policies or initiatives will be introduced to support it.
The Housing Market, Moving Into 2023
According to the latest Halifax House Price Index for January 2023, UK house prices have experienced a slight increase of 1.9% compared to the same period the previous year. While there were significant monthly falls at the end of 2022, the start of 2023 has brought stability to the market, with the average house price remaining largely unchanged at £281,684 in January.
However, annual growth has continued to slow, reaching the lowest level recorded over the last three years. The average house price is also currently around £12,500 below its peak in August 2022, despite remaining higher than in January 2022. If you’re planning on selling your house, make sure you utilize only the finest tools for property valuation Manchester can offer.
It was anticipated that the rising cost of living and higher interest rates would result in a slower housing market, which is likely to continue as we progress through 2023. Higher borrowing costs may lead to reduced demand, and the trend of slower growth is likely to persist. However, the potential for interest rates to peak below the level anticipated last year, combined with lower house prices, may lead to an improvement in home buying affordability over time. For those looking to buy, confidence may improve beyond the near-term.
On the other hand, if you’re looking to sell, book a property valuation.
Is There A Possibility Of The Housing Market’s Collapse?
Can the UK housing market withstand the current economic challenges or is it headed for a collapse? There are two contrasting views on the matter.
The first view suggests that without a clear plan to control public sector borrowing and balance the public finances, the Bank of England may need to aggressively increase Bank rates to contain inflation and domestic demand. This could result in a significant decline in house prices and lead to negative effects on the housing market and the wider economy.
On the other hand, some experts believe that the current economic outlook has reduced the risk appetite of lenders, which may prevent the build-up of systemic risk and large-scale disruption in the housing market. This cautious approach from lenders may help to stabilize the market, particularly as house servicing costs continue to rise.
The future of the UK housing market remains uncertain, but keeping a close eye on policy changes and economic indicators may help investors and buyers make informed decisions in the months ahead.
Conclusion
The UK property market has been booming over the past year, driven by a range of factors, including the temporary stamp duty holiday and the shift in lifestyle priorities prompted by the pandemic. While it’s uncertain what will happen long term, the market is expected to remain active in the short term. However, with the possibility of rising interest rates on the horizon, it’s important for buyers to approach their purchases with caution and seek professional advice before making any decisions. The experts at Bentley Hurst can help.