Deals set to plummet but no price crash, says JLL
There will be a 'steep fall' in transactions with house prices suffering a more modest drop next year, the agency forecasts.
House prices will not crash next year, though the number of transactions will fall sharply, major agency JLL predicts.
The housing market is set for ‘a correction’ in 2023 that will see a 6% reduction in property prices, not the 20-30% drop some feared.
“These predictions fail to recognise that UK house prices have never fallen by more than 20%,” JLL argues in its UK Residential Forecast.
The agency says home purchases will suffer “a steep fall” as “a cocktail of transactional headwinds” such as far less first-time buyers hits the market.
A ‘sluggish market’, JLL says, will be made worse by a continuing problem with the supply of new housing, with a shortfall of over 600,000 in the next five years.
Market crashes
Previous housing market crashes in 1989-93 and 2008-09 featured high unemployment or unrealistic lending to homeowners, with neither factor present now, JLL says.
Also, most property owners have equity in their property and higher incomes than at times of previous crises. These strengths, combined with a lack of appetite for banks to repossess homes, make it less likely history will repeat itself, according to JLL.
“This dynamic will create a sluggish market in which buyers and vendors haggle over price”
“This dynamic will create a sluggish market in which buyers and vendors haggle over price, and ultimately less transactional activity occurs with the supply of new homes for sale gradually becoming constrained,” JLL says.
Many people who were considering buying a property will stay in rented homes. The rental market will continue to suffer from high demand and poor supply, JLL forecasts.
