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This Is Money - Will house prices fall in 2023 and is it a bad year to sell or move?

ended 20. December 2022

A journalist on This Is Money would like to know: 

Will house prices fall in 2023 and is it a bad year to sell or move? 

What could falling prices mean for home movers and first-time buyers – particularly those with mortgages?

And what will happen to mortgage rates?

 

11 responses from the Newspage community

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Gary Bush
Financial Adviser at MortgageShop.com
Property prices in 2023 are almost certainly set to undergo a correction after the crazy highs of the past two years. However, if fixed-rate mortgages keep reducing, as they currently are, with the shortage of decent available properties across the UK then we may get away with a temporary rather than a long-term reduction in house prices.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
The market is in the process of imploding and it's going to be spectacular. It'll hit rock bottom in the summer of 2023 and a lot of pain will be felt by those needing to sell because they cannot afford their mortgage payments as increasing interest rates bite further into 2023. The market will come back, as the government changes course on stimulus and the central bank pivots on interest rates. The second half of the year will see bargains galore and that's the time to get into the market. Until then, put your hard hat on and buckle up. 2023 will see change at the Bank of England as Bailey has handled things badly and will keep rates too high for too long.
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Riz Malik
Independent Financial Adviser at R3 Wealth
Continued house price growth was never sustainable if income did not rise at the same rate. Prices will fall next year, but this is not necessarily a bad thing, especially for those looking to get onthe housing ladder or move. Lower prices mean smaller loans and mortgage payments and this will help to mitigate the rise in mortgage rates. Expect a price war to erupt in the mortgage market in January as lenders compete for market share to make up for a poor fourth quarter of 2022.
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Craig Fish
Director at Lodestone Mortgages
There is no doubt that house prices are going to drop, but for most this isn't bad news. In fact, it isn't news at all. If moving home then it's all relative and the price reductions will cancel themselves out. Whilst it would appear to be good news for first-time buyers, I suspect that the small (10%) drops that we will see will still not be enough to allow many to get on the housing ladder due to the cost of living crisis and wages that aren't keeping up with inflation. Those that may suffer will be the ones that bought in the last 12 months with only a minimal deposit and who need to sell for whatever reason. Rates are likely to continue falling as a rate war commences in the new year, with lenders fighting for business, but the days of ultra-cheap money are long behind us now.
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Mike Staton
Director at Staton Mortgages
House prices will fall slightly but not by the 30% predicted by some. A 5% to 10% fall seems realistic. Mortgage fixed rates will continue to fall, whilst the base rate will probably increase and peak at 4.25%. We are seeing a return to normal and fully expect the base rate to see fixed rates return to the low threes by 2024. Whilst this looks like doom and gloom, it isn’t, the housing market is fairly resilient and the first-time buyer market is vital to it so watch this space.
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Imran Hussain
Director at Harmony Financial Services
If anyone expected rates to remain low and house prices to continue rising, they where, unfortunately, in cloud cuckoo land. Average mortgage rates had to rise at some point, it's just unfortunate we have had such a massive rise in the past 12 months. I expect no house price growth in 2023 and sellers have to be realistic as we are finding surveyors far more cautious with valuations, which impacts lending. If your property is overpriced, it will just sit on the market and not sell.
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Kylie-Ann Gatecliffe
Director at KAG Financial
Call me an optimist, but I don’t think 2023 is going to be all the doom and gloom that many are predicting. Even if we see a 10% drop in house prices, official data shows that, over the year to August, we saw an increase of 13.6%. So there will be less of a housing crash in my opinion and more of a correction to pre-pandemic prices. As busy as the past two years have been with property sales, it has been tremendously difficult for first-time buyers to get on to the ladder, with many being outbid or simply being priced out of an area. 2023 could be their year. When it comes to selling and buying the reduction is usually seen on both sides, the one you are selling and the one you are buying. Lenders are still reducing mortgage rates and I believe these will stabilise into next year.
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Jamie Lennox
Director at Dimora Mortgages
High mortgage rates, the sky-high cost of living and a looming recession are all likely to dampen the housing market heading into 2023. That said, if house prices do drop it does create an opportunity for first-time buyers to jump onto the housing ladder after previously being priced out. Any reduction in house prices is also relative as all price points are likely to be impacted by this and, in real terms, if you're moving up the housing ladder, that more expensive home has likely taken a greater hit on the current value than the house that person is selling. So providing people still have equity in their home to move in the first place they can actually benefit from falling house prices.
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Michael Webb
Managing Director at Mortgage Republic
We're likely to see a downward correction in house prices and an increase in available stock. Both these factors could make it a good time for people to get onto the property ladder in 2023, as well as move to upsize. Mortgage rates in the marketplace have actually stabilised over the past six weeks, even with an increased Bank of England base rate. There will probably be further hikes from the Bank of England in the months ahead, however the margin between the retail market and base rate looks like it will continue to close.
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Jonathan Burridge
Founding Adviser at We Are Money
Property prices for higher value homes will likely see a reduction in value. There remains demand for properties below £500,000 and these are less likely to see significant longer-term devaluation. The time to buy is now or 20 years ago. The time to sell is when your investment isn't returning what you expect or your circumstances require it.
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Graham Cox
Director at Bridging Hub
House price crash. Correction. Whatever you call it, it seems nailed on that house prices will fall substantially in 2023. Monthly falls of 2-3% are likely and I think we'll see property prices drop 20% in 2023. The UK property market is massively over-inflated and about to go pop. For first-time buyers, falling prices are good news, just sit tight and wait. For anyone who needs to move or buy soon, haggle extremely hard. It's a buyer's market now. I don't see mortgage rates dropping significantly in 2023, though if inflation subsides, we might see fixed rate deals in the 4%-4.5% range towards the end of the year.