Will House Prices Crash in 2023?

Andy Moores
2 December 2022
Category: Residential Sales and Lettings, Selling your home
Tags: 2023, House prices, will house prices crash in 2023

There is much talk about the state of the economy right now and it seems a confusing time to make a decision on your most important asset. The big question being asked is: Will house prices crash in 2023? To help make this a little clearer, we have broken this down into bite sized chunks.

Will house prices crash in 2023?

Demand for property in the South Hams remains strong, why wouldn’t it, with our beautiful coast, countryside and wonderful villages and towns. What we are experiencing on the ground here at Luscombe Maye, is that many different types of people still want to be living in the South Hams and are moving either organically or due to the desirability of the area. Our buyers are couples wanting to retire to our beautiful area to be nearer family, people needing to upsize or downsize locally, work relocations and second home/investors. Added to these buyers are 2022’s rental tenants, who are expected to become 2023’s buyers, which will also increase demand in the area.

Unemployment in the South Hams remains low

In reality, the UK economy is back to pre-pandemic levels and appears to be flat lining rather than a full-blown financial crisis. One of the key positive factors is that unemployment remains very low, the lowest for nearly 50 years and job vacancies remain high.

Mortgage lending remains active

Looking at interest rates, they have remained low for 15 years and it seems that now although they have risen, they are not expected to rise as much as the markets originally feared, with 4% being predicted. Mortgage interest rates are also likely to settle down in the coming months. Mortgage lending remains active and appears to be holding up well.

We are experiencing a ‘slow down’ in the market

So, will house prices crash in 2023? With our ‘glass half full’ hats on, one could argue that whilst we are certainly in a slow down with the property market, we are not falling off a cliff by any means. With the stamp duty cuts now in place until 2025, this should allow a cushioning of the extra expenses many find themselves with. An estimated 200,000 purchasers will now not need to pay any stamp duty at all, allowing some buyers to save over £11,000 on their property purchases.

Zoopla has commented that: “The strength of the post-pandemic market resulted in buyers having to pay, on average, 100% of the asking price or higher on some occasions for much of 2021 and 2022. The average discount to achieve a sale has widened to 3% in recent weeks. Historic data shows that discounts to asking prices in the region c.5-7% are consistent with annual price falls.

“We expect the discount to widen further as we move to more of a buyers’ market. The positive is that strong house price growth has given sellers more room to negotiate on asking price. The prospects for 2023 really depend on how willing sellers are to adjust asking prices in line with what buyers are prepared to pay.”