If you’re considering buying a house in the UK in 2023, the current state of the housing market might leave you wondering whether it’s the right time to invest or if you should wait a little longer. The housing market in the UK has shown some signs of improvement in May and June 2023, but there are factors at play that could impact your decision.
The UK Housing Market in May and June 2023
The UK housing market showed some improvement in May 2023. The Royal Institution of Chartered Surveyors’ (RICS) measure of new buyer enquiries rose, and the gauge of agreed sales also improved compared to the previous month according to Reuters.
However, there are signs of a fresh loss of momentum in the market. Britain’s biggest mortgage lender, Halifax, reported that house prices dropped by 1.0% year-on-year in May, marking the first annual decline since 2012. Rival Nationwide reported a larger 3.4% annual fall in prices, the largest since 2009.
This decline in house prices is anticipated to continue due to a forecasted slowdown in the housing market. Market expectations suggest the Bank of England’s Base Rate will peak at 5.5% later this year, up from 4.5% currently. This could exert more pressure on demand and prices in the coming months.
Predictions for the UK Housing Market
Despite the recent improvement, experts predict a cooling housing market for 2023. The UK is grappling with a recession and higher mortgage rates, which have already led to a month-on-month fall in house prices. The average house price dropped 2.3% in November from October 2023, the most significant drop since the start of the financial crash in 2008. This slowdown is expected to intensify, with all housing indicators flashing red as rates are set to increase further. Banks and building societies anticipate lending 23% less to homebuyers next year, taking mortgage volumes back to their level before the pandemic. This ends the two-year boom that significantly lifted house prices.
Many property experts predict a decline in property prices next year, with estimates ranging from a 5% to a 20% drop. The property firm Savills predicts a 10% drop, while the real estate firm Jones Lang LaSalle forecasts a 6% drop. However, both firms expect a recovery to 1% price growth in 2024.
The Bank of England has warned that 4 million households could face higher mortgage payments next year, which could cause severe financial difficulties for 220,000 households.
Should you buys a house now or wait in 2023?
The decision to buy a house now or wait depends on many factors. Given the current UK housing market conditions as of June 2023, there are a few things to consider:
Mortgage rates and approvals
With mortgage rates having risen and new mortgage approvals having fallen, it might become more challenging to secure a mortgage. If you can lock in a favourable mortgage rate now, it might be a good time to buy. However, if the trend of rising rates continues, you may find it increasingly expensive to borrow money for a house purchase, which could make it more prudent to wait.
House prices
Overall, house prices are falling in the UK, which might suggest that waiting a bit longer could allow you to buy at a lower price. However, bear in mind the regional variations. In some regions like Bromsgrove and Rochdale, prices are growing significantly, so waiting may result in higher prices. In areas like Aberdeen where prices are falling, waiting might be beneficial.
Supply-side challenges
Current trends suggest a significant slowdown in the housing supply, which could potentially push prices up in the future due to increased competition among buyers. If the location you’re interested in is experiencing a supply crunch, it might be a good idea to buy now before competition intensifies further.
New homes market
If you’re considering buying a new build, the market seems to be showing signs of resilience with sales rates picking up. Buying now could allow you to take advantage of any incentives currently being offered by housebuilders, but be mindful that the ending of the Help to Buy scheme and higher interest rates are creating headwinds for this market.
But aside from the market conditions, one of the things that impact whether you should buy now or later in 2023 and beyond depends on your personal circumstances. Things such as whether or not you’re financially ready, have secured a good mortgage rate, and found a property that suits your needs in a location with favourable market conditions, all play a role. Together they can determine if it might be the right time to buy. If you’re uncertain, it might be better to get a home valuation and seek expert advice from impartial professionals. You can do this by commissioning a RICS home valuation, which will not only determine the price of your current property but also give you insight into current market conditions.
To summarise
The decision to buy a house now or wait hinges on various factors. The UK housing market has seen a dip in activity and prices due to mortgage market challenges, but there are regional variations and potential policy changes to consider. While there are hurdles, there are also signs of resilience, particularly in the new homes market.
This article provides a snapshot of the current situation, but it’s important to stay informed and consult with professionals as market conditions continue to evolve.
Please note that I wasn’t able to find detailed information about the forecast of the housing market and the mortgage rates, which would be important factors in your decision. Therefore, it might be a good idea to consult with a financial advisor or a valuation expert to get the most accurate and current advice.
