House prices will dip only slightly in 2023, buoyed by continuing high demand and low supply in the property market, despite pressures on buyers caused by the cost-of-living crisis and mortgage interest rate rises, according to property specialist Centrick.
Centrick’s Market Predictions for 2023 report also highlights areas that look set for a boom in new housing developments, including Solihull, Derby and Burton-on-Trent, which is seeing “impressive levels of rejuvenation”.
Birmingham, it says, will continue to soar in popularity for homebuyers and renters thanks to a thriving local economy, strong jobs market, HS2’s planned arrival and the lasting resonance of the Commonwealth Games.
The report said: “With inflation and interest rates both rising, it’s anticipated that 2023 could see a slight dip in property values but not by as much as you might assume.
“Overall, the market is expected to remain relatively buoyant for sellers despite the rather negative view many news and media outlets have had regarding the future of the property market.
“This comes as a result of a variety of factors in tandem: increasing fuel costs, hiking energy prices, and a cost-of-living crisis in 2022 have left many prospective purchasers with less to put towards their savings for a deposit, and with lower income available to contribute each month in mortgage repayments.
“However, with the Government recently announcing the Energy Price Guarantee, it appears that the short-term worries many homeowners have regarding their energy expenditure may be easing a little.
“It is also important to note that these price dips are corrections rather than a worrying negative trend.”
Furthermore, there is still high demand and low supply in the property market.
January 2022 saw a 15% increase in property enquiries for Rightmove, but the number of listings continues to drop significantly.
The Financial Times noted that the start of 2022 saw 350,980 properties on the market across the UK. Although this certainly sounds like a large number, this is a dip of 36% since 2020.
The suspected cause of such a dip in supply is the pandemic, which has added pressure to an already tense discrepancy between supply and demand by halting new developments under construction and putting time pressure on existing chains.
With such a lack of supply, property prices continue to rise, and homes are being snapped up faster than ever according to Rightmove.
This imbalance looks set to continue into 2023, demonstrating that 2023 could genuinely be a seller’s market, says the report.
September’s ‘mini budget’ was warmly welcomed by first-time buyers, who will now benefit from the return of Stamp Duty Land Tax (SDLT) exemptions for the foreseeable future.
The changes will make it cheaper to get on the property ladder, as first-time buyers will no longer have to pay Stamp Duty on property purchases up to £425,000, helping them save thousands of pounds.
Centrick believes this will produce a tangible boost for the sales market, which could balance buyer demand with the recent influx of rental demand as 2022’s tenants become 2023’s purchasers.
Stamp Duty won’t just impact first time buyers. It will also benefit investors as they will be able to recoup money on their property purchases that could be used to save for their next investment property, or to offset potentially higher mortgage interest costs.
In the new homes market, space for developments in cities such as Birmingham, London and Manchester is becoming increasingly scarce and expensive.
New locations are emerging that present developers, investors and homeowners with opportunity. Centrick highlights three key locations that are set to soar in popularity in 2023 in terms of the new homes developments.
The report continued: “Solihull is a vibrant gem in the West Midlands thanks to its variety of social and arts events, many of which Centrick has been honoured to sponsor.
“There is a tangible sense of community in Solihull that many new homes developers are seeking to take advantage of.
“Better still, Solihull offers unrivalled access to Birmingham, with commuters being able to catch a train from Solihull Station to Birmingham Moor Street in the city centre in just eight minutes.
“The combination of Solihull’s fantastic location and community-driven environment sets it up to be one of the most sought-after towns for prospective new home developments in 2023,” says the report.
“Burton on Trent is set to see impressive levels of rejuvenation over the coming years, with the town’s high street currently undergoing significant development to ensure it is better connected, greener, and a fantastic place to set up a business.
“What’s more, the commutability of Burton has already solidified its status as a fantastic place to purchase property – whether you need to get to Wolverhampton, Derby or Birmingham, Burton puts you in easy reach.”
Additionally, Centrick’s research has indicated that it is Birmingham that will require the construction of over 4,000 homes each year in order to keep up with this predicted soar in population, with demand certainly not showing any signs of waning.
Demand is already far outstripping supply in Birmingham, with the average number of new homes built in the city each year sitting at only 900, which is less than a quarter of what is needed to keep up with the magnificent traction Birmingham is gaining.
As a result, Centrick anticipates that the new homes market in the city and its surrounding areas will continue to grow, with developers starting to get plans into action to avoid a housing crisis and take advantage of the unprecedented demand in Birmingham.
It predicts property prices across the city could rise by 24.5% over the next five years, with a 14% predicted rise in rents by 2026.
