It’s that time of year, when Business Link Magazine invites the region’s business leaders to offer up their predictions for the year ahead.
It has become something of a tradition, given that we’ve been doing this now for over 30 years.
Here we speak to Luke Gidney, Managing Director at Leeds estate agent HOP.
HOP is predicting a slowdown in the housing market in 2023, rather than a crash, and expects property values to fall by approximately 8% due to increased interest rates, which follows several years of high price growth.
The company also manages one of West Yorkshire’s largest rentals portfolios, worth more than £245 million, and expects rents to increase by 7% in 2023, slightly lower than the 10% year on year increases over the last few years.
Rising interest rates have disrupted the property market in recent months and although further increases are likely, we don’t expect them to go as high as some forecasts. We predict interest rates will peak at around 4% in 2023.
The property market is very much linked to confidence in the economy, as well as employment, interest rates and the supply of housing stock. Employment rates are high with more job adverts than workers available, and there’s still a shortage of property available for sale, which will help to support prices.
Although the cost of fixed price mortgages soared following the mini-budget, they are now falling again and should stabilise early next year as more products become available, which will give borrowers a greater degree of certainty. Borrowing costs will still be higher than what we’ve become used to over the last 15 years or so, and with 300,000 fixed term mortgages coming up for renewal each quarter, it will be an anxious time for those who are re-mortgaging.
Therefore, after several years of rapid house price growth, it’s likely that this spring, sold prices will be approximately 8% lower than they were at the same point 12 months ago, but it will be a slowdown in the market, rather than a full-blown crash. There will be a small drop in transaction volumes and this will mean a slight reduction in asking prices, down around 5% in 2023.
The growth we’ve seen in recent years will give sellers more room to negotiate on their asking price though and we will see a shift to an environment that favours buyers. This could be good news for some, including cash buyers and first timers, especially now that the Help to Buy scheme has come to an end.
Ultimately, things will be calmer, and the market will level out in 2023, making the role of an experienced estate agent, with strong local knowledge and accurate marketing advice, more important than ever for sellers looking to negotiate an evolving market.
