The start of 2023 has painted a mixed picture of the housing market, with a rosier start than in 2022 for some and a more hesitant one for others.
That’s the view of Nicky Stevenson, MD of Fine & Country, who believes that realism versus aspiration is set to be critical for sellers transacting over the coming months.
Stevenson notes that, to a large extent, the dust is still settling from the chaotic final quarter of 2022. “The Bank of England indicates that December mortgage approvals, at 35,600, were at their lowest level since the global financial crisis, down by nearly a third quarter on quarter,” said the MD.
“However, Rightmove reports the number of prospective buyers contacting agents at the start of the year was up 4% compared to the last ‘normal’ market in 2019. The start of January was also the third busiest day on record for property valuations, considered a sign of future demand,” she added.
Stevenson also pointed out that by the end of January, the swap rate had pared back to 3.8%, its level of early September. Although the base rate of interest has just risen to 4%, it looks likely to stay below 4.5%.
“These factors, together with the latest forecasts for the UK economy, mean that mortgage approvals are likely to settle somewhere above December’s level,” the MD said. “There are signs too that inflation has peaked, and the latest independent forecasts for the UK economy released by HM Treasury paint a tentatively more optimistic picture, with the economy now expected to contract in 2023 by less than 1%.”
Focusing specifically on the prime sector, Stevenson said that year-on-year price growth in the premium markets is currently outpacing the wider market. “The 10.8% annual price growth continues to be fuelled by high value activity in London and across the South,” she observed. “At £851,000 the prime market price threshold has risen by over £125,000 compared to January 2021.”
