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Reasons Why UK House Prices Could Fall In 2023, And Why This Year Could Be A Great Time To Buy

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Hardly renowned for their positive slant on life, many of the nation’s newspapers have been discussing a potential fall in UK house prices for some time. Property prices are indelibly linked to the state of the economy: the aftermath of the global pandemic, the lingering effects of the UK’s exit from the European Union, and the war in Eastern Europe have combined to create a period of considerable financial uncertainty that is marked by higher than usual inflation and interest rates.

Some pundits expect UK house prices to fall or at least level out in 2023, which could present home buyers and property investors with a tantalising opportunity to cash in on the downward trend and mitigate higher mortgage interest rates with lower borrowing. So, if you are planning to buy a property soon and you have a good downpayment to make towards your mortgage – as the cost of borrowing large sums is expensive at the moment – now is the time to find reputable residential property solicitors to take care of the conveyancing on your behalf.

UK House Prices: Is A Fall On The Cards?

According to figures released by Nationwide Building Society – one of the country’s leading mortgage lenders, UK property prices fell by 1.1 per cent to the year ending February 2023. Four factors are attributed to this:

Fears Of Recession: Although GDP remains positive for now, meaning the country’s economy is still growing and is not in recession, fears of a potential downturn have perpetuated for many months, leading to a fall in consumer confidence and greater caution in the way that people spend their money – particularly as the cost of living rises.
Rising Interest Rates: Due to soaring inflation throughout 2022 and into 2023, largely a result of the war in Ukraine, the Bank of England has increased interest rates repeatedly during the last year. Consequently, higher mortgage rates may discourage some house buyers from investing in property.
Changes In Employment: A shift towards remote or hybrid working may tempt some workers away from urban centres to rural locations where the change of property is more affordable and the pace of life is less hectic – resulting in lower demand in towns and cities.
Oversupply Of Housing: In some regions, an oversupply of properties could drive competition among sellers, leading to lower prices as buyers leverage greater bargaining power.

Will Lower Prices Make 2023 A Good Year To Invest In Property?

Whether to purchase a property now is a question many people are currently considering. Although inflation remains high, the government has committed to reducing it, with Prime Minister Rishi Sunak earmarking lower inflation as one of the key performance measures of his premiership.

Key Takeaways:

Falling prices mean cash buyers could benefit. With no mortgage to pay, these purchasers stand to profit from lower investments, without having to worry about interest rate rises.
Economic instability is likely to be temporary and may not be as bad or widespread as some journalists would have you believe, so inflation and interest rates will fall eventually.
Inflation is likely to have stabilised by the end of 2023, with a subsequent drop in interest rates in 2024, in advance of the General Election! Buyers who plan to stay in their new home for several years will likely ride out economic uncertainty.
With Halifax reporting a 1 per cent increase in house prices in January and February 2023, prices are very unlikely to fall much, so investing now could be a financially savvy decision.
Obtaining a fixed-rate mortgage offers certainty about costs, whereas a private landlord could increase rental prices as interest rates rise.

Contact Astle Paterson For Professional Conveyancing

As expert property conveyancing solicitors, we can help to eliminate the stress from your property purchase, so you can look forward to acquiring the keys to your new home.

For a free, no-obligation quotation, please call us today on 01283 531366 or message our conveyancing team.