2023-01-24-莱坊-UK_Residential_Property_Market_Update_January_2023_2页_350kb

UK Residential Property Market Update: January 2023

Key Points

1. Fourth Quarter (Q4) Activity

   • RICS survey indicates continued stagnation in December 2022, with close to half of respondents reporting declining asking prices.
   • Sales data shows reduced demand, particularly post-Budget interest rate hikes. January typically sees a surge.
   • Lettings market saw increased demand in December with rising rental values across high-value areas like London.

2. Sales Market

   • Sales activity remained subdued, with a net balance figure of -54% in December, reflecting buyer caution.
   • Mortgage approvals dropped significantly in December, falling by 33% year-on-year, indicating lower borrowing capacity.
   • House prices declined slightly (slightly slower decline than November) but annual growth remains low, around 2%.

3. Lettings Market

   • Tenants sought more rental properties, leading to higher average rents (+0.9% monthly).
   • Leading property values are expected to recalculate as buyers face spending curbs, benefiting cash-rich investors.

4. Prime London Markets

   • Prices held steady in both prime central and outer London in December 2022 despite year-on-year declines.
   • Notable long-term rent increases, e.g., prime Central London at 17.8% over the year, though subdued compared to previous years.

5. Inflation and Rate Expectations

   • With Bank of England potentially raising rates above 3.5%, interest rates are expected to normalize, slowing the market further.

6. Overall 2023 Outlook

   • Prices are projected to fall approximately 5% in 2023, reflecting a “holding pattern” as the impact of rate hikes settles.
   • Assessments are regional, with London markets resilient but other areas expected to lag.

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Bottom Line

• Houses and Lettings: Demand holds, prices softening, but renters benefitting from tight inventory.
• Buyers: Facing higher borrowing costs and revised affordability expectations.
• 2023: Expected to be an adjustment year, with prices falling but tough competition for cash-rich investors.

Source: UK Residential Property Market Update (January 2023), authored by Knight Frank Research.