Residential property prices across the UK will decrease by 10.98% while rents will rise by 12.91% in 2023, according to the inaugural Annual Research Report from broker Finanze.
Finanze expects home prices to fall throughout 2023 as demand slumps due to several factors including reduced mortgage affordability, a drop in approvals and sellers being forced to settle below their asking prices.
Joshua Ellard, head of specialist finance & research at Finanze, said: “Affordability will continue to be a driving factor in the fall of residential property prices in the coming months.
“Reports from estate agents suggest that upwards of 50% of recent transactions have been below sellers’ asking prices.
“The shift to a buyer’s market is well underway, which is an entirely different narrative than the one we have experienced in recent times.”
It is widely accepted amongst analysts that residential prices will fall in the coming year, however, the magnitude of the correction is up for debate.
Knight Frank has predicted a 5% decrease, Savills is anticipating a 10% drop, whereas reports from Bloomberg have warned of a potential 20% fall.
Elsewhere the report Finanze expects further the Bank of England Base rate to continue to increase up to 5% as the central Bank continues to battle inflation.
But the broker thinks the BoE is winning its battle anticipating that inflation will be around 4.5% by Q4 2023 before eventually settling at a ‘new normal’ of 3% in late 2024.
Finally, Finanze expects GDP to remain relatively flat in 2023, decreasing by around 0.5% over the year, before returning to a period of economic growth in 2024.
