After a bumper few years in property, during which house prices climbed fast, the rising cost of living is bringing the market back down to Earth with a bump. We look at the impact of higher mortgage rates and a drop in property values, exploring what this could mean for sellers in early 2023.
Since last year’s mini-Budget - and the subsequent rise in mortgage rates - house prices, property sales and mortgage approvals have dropped considerably. Research from Zoopla showed that demand has reduced 44% since the mini-Budget in September 2022, and data from Nationwide indicated a monthly house price drop of -1.4% in November last year, with a further -0.1% dip in December.
As a result, it looks as if 2023 will be a buyer’s market, with sellers competing for purchasers rather than buyers fighting over a small pool of properties, as in recent years. Therefore, it is really important that anyone looking to sell this year adjusts their expectations and understands that express property sales on the open market may be a thing of the past.
Due to the turmoil in the markets and the impact on house sales, it is likely that buyers may delay purchases in the hope that mortgage rates and house prices will reduce further in 2023. The Office for Budget Responsibility has suggested that house prices could fall by as much as 9% before rising again in 2025, leaving many buyers likely to hold out for a better deal.
In some cases, buyers are being encouraged to delay purchasing until 2024. The Centre for Economics and Business Research (CEBR) predicts the market could have fully levelled out next year. It also suggests that mortgage rates could have stabilised by then too, further encouraging buyers to stay put for longer. This could particularly be the case for Generation Rent and first-time buyers, who may be struggling with rising rents and, therefore, not able to save as much for a deposit as they need.
Many sellers will not be in a position to wait for indecisive, hesitant buyers. They may need to sell quickly, especially if they have a fixed rate mortgage deal that is coming to an end, if they need to move to a more affordable property or if they need to perform some financial rebalancing. In these cases, there is another option than the unpredictability of the open market.
Open Property Group specialises in quick cash sales for sellers who can’t wait for a buyer to be found. Our sales start with a free cash offer and you can choose a transaction timescale that suits your circumstances, with completion in as little as 7 working days, if required. Get your cash offer now or talk to our friendly team about how you can sell in the current climate.
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