In my latest property price report for April, it would be very easy to think that the property market in 2023 is already decided. The data so far suggests we will have a similar year to 2018, some falls or stagnation in property prices, while transactions are currently tracking just below the 1.2 million, we achieve ‘on average’.

But, that’s ‘so far’ and we have a long way to go yet! The tricky issue for 2023 is that we just aren’t sure what will happen next. Ever since the pandemic, lots of things forecast just haven’t happened and lots of things not forecast have. Property prices were due to crash, they didn’t. Unemployment was expected to rise into double digits, it didn’t.

Everyone was reported to be moving out of our cities, then it was reported they were moving back and now, especially from a rental perspective, our cities are becoming ‘overcrowded’ again. And, although the economy did sink the most since records began, it wasn’t the disaster we all thought it would be, partly due to government interventions across the globe.

Interest rates

What we didn’t expect was a shortage of labour and the resulting rapid rise in wages. Added to this the shock of the Ukraine war which has driven up energy prices and created an enormous spike in inflation (although some did predict the latter, but for different reasons). And of course, the horrendous devastation caused to Ukraine and its brave people.

What we didn’t expect was a shortage of labour and the resulting rapid rise in wages.

At the end of last year, forecasters believed base rates could hit 6%, but now it looks like they will peak around 4.5%. Mortgage rates did hit 6%, but thankfully only for a short period of time, now some are sub 4%. Of course, one previous forecast which will help us through this quieter property market is that the end of sub 1% mortgage rates was predicted as far back as September 21, and those that heeded the warnings, were able to lock in great deals.

Inflation is predicted to fall to sub 3% by the end of the year, and although it’s good news, the cost of living isn’t expected to rise as fast as it has been, just as with house prices, the growth has only slowed, people’s costs will still remain a lot higher than they were 12-18 months ago.

Recession – or not?

And finally, although the forecast for a UK recession is now expected to be wrong, no-one is forecasting much growth for some time. In fact, the latest IMF report headline says we are in for a “A Rocky Recovery” (https://www.imf.org/en/Publications/WEO)

So, despite the fact that we have, so far, got off ‘lightly’ in the property market, regardless of all the chaos and turmoil, hopefully the market will continue to stay steady, but I don’t think it’s right just yet to say that’s guaranteed.

The next few months will be crucial. The property market could still go either way from a buying and selling perspective, but, as you are probably bored of hearing me say now, I still think it will depend on the individual demand and supply of properties in a local area. And as an optimist, I do think it will remain stable, but as we don’t appear to be able to predict what happens next at all, it’s not a ‘sure thing’.

So, to be able to call the market this year, I think we will need to wait for another couple of months – up until the summer – to get a good idea of where we are heading buying and selling wise.

The rental market though is much clearer. Sadly, as our stocks are so appallingly low versus demand, although rental growth will subside as it’s capped by wage growth, most good landlords with decent properties will be able to rent quickly with good rates of return. Although some landlords who have over-geared their investments may have to sell up due to higher mortgage rates and will be put off spending on improved energy efficiency, most should do well over the next year or so.

For tenants though this won’t be a good year unless they are already settled in a good home. Most tenants looking to move will struggle to find a property and without any decent enforcement of lettings’ rules and regulations, rogues will continue to thrive.