In the UK, house prices will continue to fall, as will demand
The UK Finance Association has conducted an analysis of the real estate market in Britain. According to its forecasts, in 2023 house prices in the country will continue to decline. However, this will not significantly affect the growth of sales, and the number of transactions in the market can be reduced. Analysts believe that the number of contracts of sale could fall by 200 thousand units. A total of about 1 million transactions will be tentatively made during the year. For comparison, in 2022 their number was 1.2 million.
Experts call the main factor of the slowdown in the housing market an increase in mortgage rates. The situation is exacerbated by the global economic downturn, including in the UK.
A wave of rising interest rates has swept the world, but for most banks, it has not become a serious problem. According to experts, British financial institutions have all the resources for lending, but the willingness to take out a loan is becoming less and less. According to Trading Economics, over the past year, the demand for mortgages in the Kingdom has fallen by almost 2 times. And citizens are in no hurry to buy even with the fall in house prices. It is predicted that the decline in property values will continue until the end of this year, it could range from 5% to 30%.
Experts note that after the abolition of benefits introduced in 2020, the purchasing power of the British fell. In addition, the supply in the market also decreases – sellers are in no hurry to sell housing at a discounted price.
In general, processes in the market will slow down. Buyers will wait until the object they need will become even cheaper, and transactions will be completed rather long, as there is no need for urgent conclusion of contracts. Buyers who have the cash will have the advantage in this situation. They’re protected from interest rate hikes, and falling prices will play into their hands.
The most stable sector will remain elite housing, as its buyers rarely take out a mortgage for the purchase. According to estimates by Knight Frank, more than 50% of buyers sign a deal in full payment in cash. In addition, demand here will also remain at last year’s level.
The rest of the real estate market should prepare for a slowdown. To maintain the advantage, experts advise sellers to invest in increasing the liquidity of the object, for example, to make repairs. Then there is a chance to sell the house at a higher price. Any fluctuations in the economy will be reflected in the real estate market, and both sellers and buyers should be ready for this. The competition will become tougher and the number of deals will decrease.