What's next for the UK's property market?

Plus, should you be worried about property prices next year?

Halifax records largest drop in house prices since February 2021. What's next?...

We’ve had a lot of change in recent months. On 23rd September, the Government delivered its mini-budget, laying out a series of plans for the year ahead. Many of these didn’t go down well. Now, in an effort to reverse some of the damage caused, things have changed yet again.

The base rate also increased again on the 3rd November and will rise  So, let’s take a look at how all of this is affecting the property market. Have property prices decreased? And what do the experts think? And, should you buy or sell now or wait until things calm down? 

We take a look below.

We saw an average house price fall of £3,977 in October

October saw the first fall in house prices since July 2021. According to Halifax, average house prices fell by -0.4% in October. A typical average UK property now costs £292,598* (down from £293,664 in September). Whilst the pace of annual growth has continued to ease house prices are still high.

House prices are still 8.3% higher* than the same month a year earlier

It’s important to put things into perspective; average property prices remain near record highs and all signs point to now being a great time to come to market. According to Halifax House Price Index, house prices in October 2022 were 8.3%* higher than the same month a year earlier. If you’re curious about what you could sell for in the current market, how about trying our 60-second valuation?

Get a quick 60-second valuation of your property

How will inflation affect the property market?

In theory, inflation causes house prices to increase due to simple supply and demand. With inflation set to remain high over the coming months, some are predicting a property market slowdown. This will all really depend on how the economy performs overall.

What is the latest on energy bills?

In September, the Government announced an Energy Price Guarantee, freezing standing charges and unit rates for households until 2024. Since taking over as chancellor, Jeremy Hunt has announced that the Energy Price Guarantee will now end in April 2023. Energy market analysts Cornwall Insight calculate that a typical household could face bills of £4,347** a year when the support ends. We will have to wait and see what knock on effect this may have on the housing market.

What effect does the mortgage market have on property?

The base rate changed again on 3rd November 2022. Banks and building societies pulled some mortgage deals following the original mini-budget and have since returned to the market with higher prices due to market uncertainty and inflation. Mortgage rates remained historically low for most of 2021, but monthly mortgage payments are now on the rise and are set to rise again in December. This, teamed with the increase in the cost of living might slightly dampen the number of buyers coming to market and looking for property. In fact, in the fortnight that followed the mini-budget, demand dropped by 15%*** compared to the same two weeks last year. But it’s still higher than it was in the same period in 2019.

Will house prices keep rising?

We often see a seasonal drop in average asking prices in December, ahead of the Boxing Day bounce when more buyers typically enter the market. The past two years have been exceptionally busy but the prospect of increasing pressure on households’ finances caused by the cost of living crisis could cause growth to fall.

Is it better to wait until 2023 to buy or sell a property?

Timing a house purchase is incredibly difficult, as it really depends on your individual circumstances. First-time buyers should calculate how much money they will spend on rent in the interim and assess how long they can realistically afford to wait. Buying a property is largely a personal decision but if you’d like to discuss mortgage rates which may affect your monthly payments, we’d recommend a quick chat with one of our mortgage consultants.

For buy-to-let investors, rising costs and energy prices may put a strain on further investment in property. However, there are still high yielding opportunities around the UK if you know where to look. If you can get the balance right between funding costs and generating an income, then rental property can still work in the short term. Cost efficiencies through keeping in line with regulatory requirements (e.g. avoiding unnecessary fines) are where a good lettings agent can help. Find out more about how we can help investors here.

Is there going to be a housing market crash?

The housing market is starting to cool down and prices may not rise at the rate we’ve seen in recent months but we don’t think there will be a housing market crash. Despite what the media may be reporting on a daily basis about 'falling prices', some areas are still performing incredibly well. If you're serious about selling, chatting to an experienced agent is the perfect place to start your journey.

With one of the busiest periods in the property market fast approaching, we would always recommend seeing what you could sell for in the current market…

Get in touch to find out more

*Halifax House Price Index October 2022 https://www.halifax.co.uk/media-centre/house-price-index.html
** Cornwall Insight’s April-June 2023 figures released on 17 October predicted the price cap to be £4,347.69
***Rightmove House Price Index October 2022. Compares two weeks in 2021 and 2022 (23/09 – 07/10). https://www.rightmove.co.uk/news/house-price-index

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