Real estate is steadily becoming one of the best investments in the upcoming years. With growing demand, increasing affordability, and better financing options, buying a property has never been easier or more accessible. Due to this growing demand and accelerating growth, it’s likely that the price of residential properties will continue to rise at a faster rate than inflation in the next few years. In fact, research by mortgage lender Halifax predicts that home values will increase by 17% over the next five years (much higher than an average increase in consumer prices of around 10%). This acceleration in growth is set to continue into 2023 as well. Here are 5 factors that may influence the price of UK property in 2023.
Population growth
The growing demand from both domestic and international investors will further bolster the increase in property prices. The recent decision by the UK to leave the European Union has increased the appeal of UK real estate as an investment. The expected growth in the population may also fuel demand as more and more people are becoming homeowners (as they marry, start a family, or retire) and seeking the right property through letting agents in Maidstone.
A significant number of people in the UK also look to invest in residential property as they seek to gain an extra income to supplement their pensions and savings. Additionally, the government’s efforts to encourage home ownership, such as the “Help to Buy scheme” and the introduction of extra mortgage tax relief, are also expected to encourage more people to purchase properties.
Interest rates
With demand rising, it’s only natural that prices will increase. But as property is only one of many factors that affect house prices, it’s one of the factors that determine the price. Rising interest rates, for instance, are set to drive up the cost of buying a property. This is likely to increase as more people look to borrow money to finance a home. And if more people borrow money to purchase property, the cost will naturally rise.
Brexit uncertainty
The uncertainty around Britain’s future within the European Union has caused significant uncertainty regarding investment. This uncertainty has led to a decrease in foreign property buyers in the UK. Over the next five years, however, we expect this uncertainty to further weigh on property prices as people look to take their money out of the country.
Supply constraints & a lack of house building
As demand grows and prices increase, it’s only natural that there will be an increase in supply. But as the government is currently focused on building more houses, it is set to take years before supply catches up with demand. With demand expected to continue rising, we can expect this shortage of homes to continue holding prices down. This shortage, in part, is caused by the government’s decision to focus on building new homes rather than refurbishing existing properties. And this decision has led to a significant decrease in the number of housing completions, which is expected to keep prices down.
Property prices to keep rising in the long term
In the short term, house prices may be at an all-time high. But they are unlikely to keep rising at a rapid pace for the long term. An increasing number of experts now expect house prices to grow more slowly in the coming years, particularly in the second half of the decade. This increase will be supported by increasing potential buyers, particularly as the baby boomer generation enters retirement. This all means that prices may rise at a faster pace than incomes. And as a result, residential property prices are expected to skyrocket in the future.
Bottom line
Buying a property has never been easier or more accessible. With access to a wide range of loans and more lenders willing to offer mortgages, the demand for residential property is increasing. This shift will continue well into 2023 as more people are eager to invest in a home. The increasing demand will also be supported by growing numbers of potential buyers, particularly as the baby boomer generation enters retirement. The increased interest rates that are set to increase over time are more likely to boost prices further.
