Latest 2023 agent house price forecast is less downbeat

The latest high end agency to predict the mainstream market next year is Strutt & Parker - and it’s less downbeat than some rival agencies.

S&P says national mainstream prices will either remain static or in a worst case scenario fall by up to 5.0 per cent. The outlook for Prime Central London is marginally more optimistic, with growth of up to 3.0 per cent possible, and a downside risk of values declining by up to 3.0 per cent.

The slowdown in growth is attributed to the continued economic headwinds facing the residential property market, namely the increased cost of borrowing. However, S&P reports that transaction volumes for the third quarter of 2022 are the highest since Q3 2021, and with volumes and prices 11 and 28 per cent higher respectively than the pre-Covid average, the market is cushioned for marginal downward corrections.

Matt Henderson, associate director of residential research at Strutt & Parker, comments: “The housing market can be compared to a cruise liner; in that it does not turn subtly yet it does so incredibly slowly. The past two months have been dogged by negative rhetoric in the housing market, however Q3 has been remarkably positive but much is still to play out. 

“Recent sales volumes show strong market activity, although the bulk of these transactions were reliant on mortgages secured pre the ‘mini-budget’ and the subsequent mortgage rate hikes. This level of transactions is unlikely to be sustained in the short term. As such, we can expect negative pressure on house prices as the market responds to increased rates and living costs.”

Kate Eales, head of regional activity at Strutt & Parker, adds: “There’s no doubt the mini-Budget unsettled the housing market, especially for in-progress sales. We saw transactions that were already fragile, dislodged entirely, while on the other hand many buyers who still had mortgage offers with relatively attractive rates on the table worked incredibly hard to secure their purchase.

“Looking ahead to 2023, those looking to sell can take some reassurance from three key factors. First, while values are likely to soften, this adjustment is coming off the back of solid quarterly growth for over nearly three years. Secondly, regardless of economic headwinds, there will always be buyers who need to move, and they will be looking to transact in the coming 12 months. Lastly, we remain in a very supply constrained market, where even if buyer demand falls, it will still outweigh the number of available homes.”