This is a summary of key points from the Zoopla UK house price index published in January 23. We think this information will be useful for landlords and property investors.
There was a 50% drop in buyer demand in the last few months of 2022. This has caused house price growth to stall in Q4 2022. This will feed into a rapid slowdown in the annual rate of price growth in the coming months. At the end of 2022, UK house price inflation had slowed to 6.5% from 8.3% at the end of 2021 - a trend matched across all regions except London.
The table below shows how house price has stalled at the end of 2022.
Demand for homes has rebounded in the first few weeks of 2023 but remains well below the levels of January 2020-2022. Current buyer interest is in line with the pre-pandemic years and 10% ahead of 2019. On a regional basis in relation to demand and sales, agreed market conditions remain weaker in the East Midlands, where prices are higher or have grown rapidly over the last two years, exacerbating affordability pressures.
It is predicted that the start of 2023 will be more of a slow burn than in recent years. A portion of households hoping to move in the coming year will be waiting to see whether house prices will fall more quickly in Q1 and how much further mortgage rates will likely fall back. It is anticipated that demand is likely to pick up again after Easter.
One clear trend from the first few weeks of 2023 is that buyers are becoming more value-conscious in response to the hit to buying power from higher mortgage rates. We have seen a clear shift in demand towards flats with a decline in buyers looking for 3-bed houses.
This is all part of the shift back towards cities and better value-for-money homes in accessible and more affordable suburbs, as reported by Zoopla last month. It also reflects that a proportion of existing homeowners may be holding back until the outlook becomes more apparent.
It’s early days to get a clear read on the market outlook for 2023. The economic outlook has improved slightly in recent weeks, but the squeeze on household disposable incomes is very real, directly impacting sales activity.
We hope you found this helpful summary. To read the full Zoopla Report – Click here to download.
We have a lot of experience working with property investors and landlords. To find out more, view the property section on our website.
Haidee is our Personal Tax Director and is a fully qualified tax adviser, having achieved the ATT qualification in 2006. Tax efficiency being her main concern. Specialising in taxation, Haidee provides clients with advice on personal tax, PAYE services, VAT and social security. She also provides guidance to new start-up businesses.
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