Leeds estate agents HOP predict the property market will 'calm, but not crash' in 2023
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The company also manages one of West Yorkshire’s largest rentals portfolios, worth more than £245 million, and expects rents to increase by 7% in 2023, slightly lower than the 10% year on year increases over the last few years.
Luke Gidney, managing director at HOP, explained: “Rising interest rates have disrupted the property market in recent months and although further increases are likely, we don’t expect them to go as high as some forecasts. We predict interest rates will peak at around 4% in 2023.
“The property market is very much linked to confidence in the economy, as well as employment, interest rates and the supply of housing stock. Employment rates are high with more job adverts than workers available, and there’s still a shortage of property available for sale, which will help to support prices.
“Although the cost of fixed price mortgages soared following the mini-budget, they are now falling again and should stabilise early next year as more products become available, which will give borrowers a greater degree of certainty. Borrowing costs will still be higher than what we’ve become used to over the last 15 years or so, and with 300,000 fixed term mortgages coming up for renewal each quarter, it will be an anxious time for those who are re-mortgaging.
“Therefore, after several years of rapid house price growth, it’s likely that this spring, sold prices will be approximately 8% lower than they were at the same point 12 months ago, but it will be a slowdown in the market, rather than a full-blown crash. There will be a small drop in transaction volumes and this will mean a slight reduction in asking prices, down around 5% in 2023.”
A shortage of rental property, caused by people who have delayed buying and high numbers of landlords selling rental properties during the recent property boom, due to increased red tape and eroding margins, means demand for rental property is up by 10 to 12% nationally. This has driven rents up 10% over the past 12 months in West Yorkshire according to HOP.
Tom Wild, who heads up HOP’s Pudsey office, said: “There’s a major shortage of rental stock available which is pushing rents up and we’re expecting to see further increases of around 7% in 2023. When this is combined with soaring energy bills and the cost of living crisis, it’s likely that more tenants could slip into arrears.
“We believe void periods between tenants will stay low, at just five days on average in West Yorkshire, due to a chronic undersupply of private rental stock, which is partly because tenants are generally staying longer in properties and moving less. If there was more housing stock available in the private rented sector it would give tenants more choice and ease the burden on rents.”