National house prices are falling. 

January 25th, 2023

How will this affect your Wanstead home?

Welcome to my first letter of 2023. It’s certainly been a rocky economic road for the UK over the last 12 months. We’ve seen three Prime Ministers in office, a disastrous mini-budget, and the Russia-Ukraine war severely impacting our economy. Furthermore, the cost of living crisis is plunging millions of people below the breadline, and now we hear warnings of a looming recession: the longest the UK has ever faced. 

And house prices are falling. Towards the end of last year, lender Halifax reported a “national monthly drop [in house prices] of -2.3% – the largest seen since October 2008.”

Will the Wanstead housing market ‘crash?’

Headlines predicting a housing market ‘crash’ have been dominating social media and tabloids of late. But are they accurate? To interpret how the market may perform this year, we must first understand how economic factors can affect house prices nationally. 

Back in December, the Bank of England raised its base interest rate to 3.5%, the ninth consecutive increase and the highest rate since 2008. Andrew Bailey, governor of the Bank of England, said he and his colleagues anticipated inflation will come down from its 41-year high this year: “We expect inflation to start falling more rapidly, probably from the late spring onwards.” 

How does inflation impact the housing market?

In general, rising inflation coincides with slower house price growth. In this vein, you’d expect a steady fall in inflation to allow house prices to continually increase. But it’s important to note that throughout 2022, the housing market did not operate at “normal,” pre-pandemic levels.

In early 2022, house prices reached 18-year high record levels. Property professionals, including myself, were tackling a severe supply and demand issue. There were significantly fewer homes coming to the market than there were prospective buyers. Sales often ended in bidding wars between interested parties, ultimately driving sold prices up nationally. 

But towards the end of last year, strong demand levels began to decline. The national UK housing market saw a drop in new buyer enquiries for the ‘sixth consecutive month’ in October 2022 (RICS monthly report, November 2022). With lower demand, prices will begin to fall. 

What about mortgage rates? Could they affect house prices?

Many economists and mortgage advisors first predicted fixed mortgage interest rates could reach highs of 6%, but they now lean towards an average of 4 to 4.5% by the end of this year. The general consensus appears to be that fixed rates will remain relatively high, but will gradually begin to fall as 2023 progresses. This is positive news if you’re considering selling your higher-value home this year, as your eventual buyer is more likely to be funding their purchase with mortgage finance.  

Although mortgage rates appear to be cooling, it’s undeniable that during a cost of living crisis, fewer people will be able to afford to finance high-value homes. I believe properties such as yours will take longer to sell than last year – but they will still sell. People will always need to move. This isn’t bad news. 

You may think waiting longer to find a buyer is a negative thing – fortunately, that isn’t the case. The more discerning the buyer is, the likelier they are to put forward serious offers and see the sale through to completion. It helps to alleviate the risk of having your time wasted.  

What has been happening in Wanstead?

According to data from HM Land Registry*, sold prices across the Borough of Redbridge in October 2022 increased by 5.4% year-on-year, and were 0.9% higher than the previous month. The average price for a detached property was £1,077,569. 

In December, Rightmove reported asking prices across the borough had fallen by 0.6% from November – at an average price of £514,588. However, this was still a 5.2% year-on-year increase

Should you sell your home in 2023?

Wanstead asking prices may be gradually falling, but they remain significantly higher than in 2021. Sellers are still benefitting from inflated post-Covid prices, but must accept that demand may not be as high as we’ve seen over the past year. 

I predict property prices will slowly decline this year. However, although an uncertain economy is causing market fluctuations month-by-month, I don’t anticipate a “crash” back down to pre-pandemic levels. The odds remain very much in the favour of sellers. If you’re wondering whether to sell your home in 2023, working with a property expert who understands local market conditions – and how to effectively market your home to its full potential – is crucial if you want to sell for the best possible price. 

I hope you have found this update helpful. Please do contact me if you have any questions, or require any further advice. I’d be delighted to hear from you. 

Yours faithfully,

Clare Hughes

PS If selling your home is something you’re considering achieving in 2023, I’m on hand to offer you further guidance about local market performance, honest advice about your property’s value, and a tailored marketing strategy to assist you in finding your ideal buyer. You’re welcome to contact me directly on 07958 031122 any time. 

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*HM Land Registry data available up to October 2022, all information correct at time of publication.