House prices are highly topical debates across London, which is home to some of the highest average prices in the country, but new analysis shows that prices in areas outside the capital have been rising faster, for longer.For the first half of 2022, there was an imbalance between supply and demand, with too few properties coming onto the market.This hasn't gone away completely. The estate agent trade body Propertymark reported its members had an average of 30 properties for sale per branch in September, compared with a pre-pandemic average of 51.There are signs, however, that demand from buyers has started to drop. Rightmove says properties took an average of 40 days to sell in October, up from 32 days back in May.Crunching the numbers on average house price data going back to 2012, increases in the home counties are outpacing those within London itself. Essex’s average house price was up 60% over the last 10 years, taking the average to over £421,000 according to Rightmove. Over the same period, London’s rose 34%, but remained higher at almost £533,000.There were increases of over 50% across much of the stockbroker belt, within easy reach of central London but outside the M25, including West Sussex, Surrey and Hertfordshire. The trend, revealed by analysis of government house price index data, implies that the so-called "race for space" seen since the pandemic, with people leaving the city for more distant properties with gardens and more room, has deeper roots.B&S Director Neil Leahy said; "Many home counties have seen higher price rises than the capital suggesting more London-based homeowners have been leaving their city homes for the suburbs."The research followed the Bank of England’s announcement last week to raise interest rates from 2.25% to 3% last month, the biggest jump since the 1980s. It stoked concern that home ownership would move out of reach for many more people as mortgage costs rise, a worry that has shown up in a range of trading updates from house builders.We are starting to see green shoots, with buyers returning to the market and opting for more favourable tracker mortgage products. The era of record-low mortgage rates looks to be over, but it's not all bad news, just a new normal. Buyers keen to get on the housing ladder will welcome and drop in prices, while talk of a slowdown will send shivers down homeowners’ spines, even while the fundamental supply and demand conditions in the market should be supportive in the long term.Will there be a housing market crash in 2023?Whilst Brexit, the pandemic and more recently rising inflation, living costs and rising interest rate have all impacted the market in some way, what’s next for the UK housing market and is a severe price correction or even a crash on the way?From what we’ve seen, it’s unlikely we’ll face a housing market crash in 2023. The property market has proved itself to be very resilient, and any discrepancies in supply and demand will eventually level out. However, there’s still a lot of uncertainty around the housing market which might impact your confidence in holding off on buying property until 2023 - especially with rising interest rates.Ultimately, rising property prices mean homeowners will reap the benefits of a higher profit when they come to sell. With this in mind, the best strategy is still to invest in property if you can afford it. If you’re a first-time buyer looking to make your first property purchase, you may still want to wait for house prices to fall so you can get a mortgage that won’t put you in a tight financial spot.A SummaryWhilst opinions remain divided, as property professionals and experts, we can only report on what we see and experience day to day. We are fortunate to work in areas that are largely sheltered from economic uncertainty, and if mortgages remain affordable and accessible, there are several motivated sellers and buyers. Our client base instruct us to sell and let their properties to upsize, downsize, require a change in location for school catchment areas or business.We have seen a spike in activity for flat sales in East London. This is the result of rising rents in the city fringe markets due to a lack of private rental options. Tenants are becoming first-time buyers as mortgage payments are cheaper than the rent increases they are faced with. East London has seen a slow price growth over the last 8 years and offers value for money. A perfect storm for buyer engagement.The opposite can be said in West Essex, where price growth has been aggressively on the rise since May 2020. To offset higher borrowing costs, property prices need to soften. Prices have increased 12% on average within this region in the last 18 months, we therefore expect a reduction of 5-6% in 2023.If you’re looking to sell or let your home and have concerns about how to make this happen, we can help. Our expert agents have experienced challenging markets before and know how to navigate a move for you. Starting with professional financial advice, we will source a mortgage product best suited for your circumstances and then a begin the search to find your next home.Please pop into one of our offices to find out more.
