2023 – a market crash or just a much needed adjustment?

A lot of mainstream journalists seem to hold a very polarised view of the property market. Either it is booming, and buyers are being priced out of the market by huge demand and low stock, or it is plummeting and woe betide anyone foolish enough to invest in property. There never seems to be a sensible middle of the road opinion. Sadly, this is a result of the wider media malaise, which has seen news outlets turn into all-encompassing monsters churning out articles designed to trigger an angry response and too many people believe what they are reading. I tend to steer clear of most of the media for the sake of my blood pressure!

So what is happening out there? Well, the market has had a correction, there is no doubt about that. Perhaps 5%, maybe 10%. There are so many factors influencing how a much of a property’s value is affected by a cooling market. Location is first and foremost as prime locations always hold their value better. Condition; does it need renovating, bearing in mind the astronomical cost of labour and materials. Increasingly, how energy efficient a property is will have a significant bearing on demand and value. That isn’t surprising! Here in Suffolk we are seeing a lot of properties’ values potentially blighted by the threat of Sizewell C and a proposed massive electricity substation for the offshore wind farms. Stunning houses in picture postcard locations will always hold their value better in a downturn.

A lot of my property consultancy clients ask will the market continue to cool? Probably. A continued gradual decline in prices seems likely for the rest of this year. It looks highly possible that the current base rate of 3.5% may well be hiked again by The Bank of England Monetary Policy Committee to ensure that inflation is well and truly knocked on the head. Possibly to 4%. But the overall outlook as I see it is positive. We needed a price correction. The property market was dangerously overheated and silly prices were being paid for some properties post pandemic. This only benefits a few lucky owners who hit the jackpot. Mortgage rates were ridiculously low and now higher borrowing costs are putting a lid on house price inflation.

Taking a look at the house prices graph, the prices always ebb and flow but the one significant trend is upwards. Property will always be the number one investment and taking a longer term view on housing is the best way to keep any worries at bay about temporary blips. I for one am positive that the trajectory we are on is the right one and creates a more stable platform for the future.