Guest article by Keith Robinson, who has 20 years’ experience as a property developer, creating his own portfolio and advising on the many aspects of property management. Now retired, Keith shares his knowledge with 24Housing. Connect with Keith on LinkedIn: @keith-robinson-property
Nobody is quite sure what to predict in the current economic situation when it comes to any long-term planning in the property market.
But what we can be confident of, is that the market will be carefully monitored by anyone who is looking to buy or sell a property or is employed in the sector.
The vagaries and rollercoasters of the property market since the Covid pandemic in 2020, and the effects of Brexit, energy prices rises and the cost of living has put everyone on the back foot when deciding what is the best move to make – literally, as well as figuratively.
It is thought that the property market will start to settle down in 2023, so it may be wise to keep an eye on it in the first quarter of the year, and that will give you more of an idea of what fluctuations if any, you might expect.
With so many outside influences on what could affect the property market in 2023, it’s virtually impossible to know for certain how it will perform. Nevertheless, there are some areas that can be more easily explored to allow you to make an informed decision and do what is right for you.
High mortgage rates
After some of the lowest base rates in recent history, it comes as no surprise that the most recent Budget statement from the Chancellor suggested a hike in the rates in order to recoup some of the lost income, which has a knock-on effect on mortgage rates, which track the Bank of England’s base rate.
Higher mortgage rates are bad news for first-time buyers, who are often already struggling to get on the ladder and could also see some properties fall into negative equity. However, for those who can still afford to get a mortgage, it makes it a buyers’ market, as there are likely to be fewer people competing for each property.
Lower property prices
A bonus for those buying is that the higher mortgage rates will be offset by lower property prices as sellers will be forced to make their houses more affordable in order for them to be attractive to the buyers. If the seller is part of a chain, then lower property prices will be less of a concern for them, as they will also be buying their next property at a reduced rate. In fact, anyone upsizing may find that the difference is actually of benefit.
Fixer-uppers
Due to the nature of a fixer-upper, they can often be bought cheaply, particularly at auction. One of the main perks of buying a fixer-upper is that you can often make money on it, and quite quickly when you come to sell it. You can either make your dream home or use it as a property development stepping stone to give you the money you need to buy a different, better house. A bridging loan would give you the capital required to do the project, and the loan can be paid back when you come to sell it, or by getting a mortgage on the completed renovation. It’s a quick-fix solution that has many benefits for anyone who needs fast funds. It can be secured on the property too.
Unusual properties
If, as a buyer, you do find that the market is buoyant and you are missing out on properties that are being sold before you get a chance to offer, or at a higher price than you can afford, then it’s worth considering a more unusual property that might not get as much crowd interest.
Conversions from business to residential, or even old churches or schools, are sometimes seen to be too quirky for a lot of people. But this quirkiness can really appeal to others, and you can often get these properties at a fraction of the price and without having to get into any bidding wars with other parties.
Remortgaging
Sadly, a lot of people may be forced to remortgage their current properties, in order to afford to pay their bills. The increased cost of living is already having a profound effect, and there is no sign of this slowing down in 2023. As already mentioned, mortgage rates are set to increase, and there may well be no other option for large swathes of people whose assets are all tied up in their property. Getting a new mortgage deal might need to be the answer.
Rural v. city centre living
After Covid, and with many people now choosing to work from home, the work-life balance we all strive for is ever more important. The demand for rural living, with extra outside space and no need to commute, has seen a huge increase. Conversely, city centre living is also on the up, as young professionals don’t want to spend their days driving or on public transport to go to work, preferring to be in the thick of the action and surrounded by nightlife on their doorsteps. It is also a popular choice for anyone buying to let as rental properties in city centres are highly sought after. The popularity of suburban living in the 80s and 90s is seeing a decline, with people deciding that the tranquillity of the countryside or the bright lights of the city hold more appeal.
Final thoughts
It’s important to approach the property market with caution in 2023. Do your research and look into all the different types of mortgages available. Have a budget and stick to it; don’t be tempted to increase your maximum offer to avoid missing out. Look at recent sold prices in the area and pitch your asking price accordingly. Most importantly, carefully consider whether it is the right move for you at this uncertain time.
There is no right or wrong answer or approach. Every person, property, and area is different, making it a minefield of information to wade through and decisions to make. But ultimately, if you are armed with all the necessary details and keep on top of the market, you can make it work for you.
