No Armageddon for housing market despite economic backdrop
eXp boss Adam Day says 2023 looks to be a year where the markets weather the storm and a long way away from previous meltdown years.
The housing market is a long way off any ‘Armageddon scenario’ and will record more transactions than last year despite buyers being hampered by higher mortgage rates and a cost-of-living crisis, says hybrid agency eXp UK.
The estate agency platform analysed how annual property transactions and GDP (Gross Domestic Product) have risen and fallen since 2005 and found that it’s expected there will be an estimated 920,000 transactions in 2023 – 1.3% more than the 909,000 recorded in 2022.
BELOW AVERAGE
But that total is still below the average between 2005 and 2022, which stands at 991,000.
Since 2005 the best years in terms of GDP growth are 2014 (3.2%), 2021 (7.6%) and 2022 (4.1%) (see table, below).
Meanwhile the worst are the financial crisis-affected years of 2008 (-0.2%) and 2009 (-4.5%), as well as 2020, (-11.0%) when the market hit the brakes due to the pandemic.
Even when market conditions are less than perfect GDP tends to improve, as has been the case every year with the exception of 2008, 2009 and 2020.
eXp UK says that while 2023 is unlikely to go down as a brilliant year, it’s still set to be in positive territory as GDP growth is expected to reach 0.4% according to a forecast by the IMF (International Monetary Fund) – below the average GDP increase since 2005, which sits at 1.3% per year.
MORE TRANSACTIONS
Adam Day (main picture), Head of eXp UK, says: “The market is performing steadily despite all the negative talk about housing and the economy as despite high mortgage rates and affordability troubles it is estimated that there could be more transactions than last year.
“Analysis of the worst years shows we’re a long way away from years like 2007 and 2008, when the markets were truly in meltdown and people were staying put.”
It’s not Armageddon.”
And he adds: “After years of low mortgage rates increases were always likely to bite hard so in that context 2023 looks to be a year where the markets weather the storm. It’s far from the best year when it comes to both GDP growth and transactions but it’s not Armageddon.”