Zoopla: Housing market braced for 5% falls in 2023 but demand grows in urban areas

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, comments on the publication of the Zoopla House Price Index, showing housing market braced for 5% falls in 2023 but demand grows in urban areas.

Key points from publication:

• • UK house prices increased by 7.2% year on year – an increase of £17,500.
  • Quarterly growth slows rapidly, and we could see quarterly price falls in early 2023.
  • Buyer demand 50% lower than last year, new sales agreed 28% lower.
  • The pandemic fuelled flight to rural and coastal areas has slowed as demand weakens.
  • Interest in affordable, accessible urban areas such as Bradford and Crewe is rising.
  • Zoopla estimates UK house prices falling by 5% next year. Average price falls in London could be 5-8%.

Helen Morrissey says:

“House price growth has been pretty robust over the whole of 2022 but this hides the horror show of the past few months with demand rapidly on the slide – we face the very real prospect of quarterly price falls in the near future.

“The cost-of-living crisis is biting down hard on our finances and rising mortgage rates have put off all but the most determined of buyers.

“Added to this, the prospect of a looming recession is enough to make many people delay a house purchase for the foreseeable future.

“We’ve also seen the end of the pandemic fuelled race for space with demand in rural and coastal areas tailing off.

“Committed buyers may still be able to get their dream home as there are signs many would-be sellers are willing to be a bit more flexible on asking prices, so those willing to haggle could still get themselves a good deal. 

“The sense of nervousness is palpable as we head into the New Year as people wait for signs of house price falls before making their move.

“In one bright spot among the gloom, Zoopla expects falls of around 5% next year -this is in line with recent data from Nationwide and more optimistic than some other predictions.

“Affordability will be key -though rural and coastal areas are seeing demand fall, there is demand for more affordable urban areas such as Milton Keynes, Bradford and Coventry as people become increasingly office-based again so they will likely to be more resilient to price falls.

“Longer term, potential price falls of between 5-8% in London, coupled with wage increases and lower mortgage rates could slowly improve affordability and help more people bridge the gap and get on the housing ladder which could help fuel something of a rebound.”

Kindly shared by Hargreaves Lansdown

Main article photo courtesy of Pixabay