UK Property Market Summary and Predictions for 2023

The UK property market has undoubtedly seen a tumultuous period since the end of 2022.

Fluctuating statistics, record-breaking demand, falling supply, and concerning economic projections have left many scratching their heads and wondering:

‘Is UK property investment in 2023 a good idea?’

The following guide presents a summary of the property market in 2022, as well as a look towards what the future may hold for the rest of the year and beyond.

What Happened to the UK Property Market in 2022?

January

• Property prices, on average, increased by almost 10% from 2021
• Property experts Savills reported that demand for housing was up 49% in mid-January compared to 2018-21.

February

• Despite a slight dip in property prices, the market remained strong, with the highest growth (12.5%) in the East and South West regions
• The rental market also saw growth due to continued demand for rental properties

March

• March saw the strongest monthly house price growth in 18 years at 1.1%
• Low housing supply contributed to skyrocketing prices
• The rental market grew by 10.4%, indicating ongoing demand

April

• Rental growth was widespread across the country, with the highest increase in rental prices since 2011
• Affordability became a concern as house price growth outpaced income growth

May

• A 16% increase in mortgages for first-time buyers compared to pre-pandemic levels
• Some areas experienced significant rental price rises, but overall growth started to slow down

June

• Annual price growth dropped by around 5% from May to June
• Property investment cooled down as the cost-of-living crisis began to make rising house prices unaffordable
• Housing supply still low, but demand decreased as people prioritized other expenses

July

• House price growth rose to one of the highest rates in 2022, most likely due to the lower prices from the stamp duty holiday in 2021
• Rental prices were growing almost six times higher than pre-pandemic levels, with the strongest markets being in the North West

August

• Rising living costs and reduced housing demand contributed to slower growth
• Popular areas like the North West, however, continued to see high rental demand, with the region seeing growth of around 10%

September

• The UK found itself in a complex political situation with the Government’s controversial Mini-Budget, and the death of Queen Elizabeth II
• Rental sector growth remained steady, but borrowing mortgages became more difficult with rising interest rates

October

• The majority of the mini-budget was reversed, following a massive detrimental economic effect
• As the cost-of-living crisis steadily continued, as well as the unstable economy, a cap on house prices was beginning to limit rates

November

• House prices fell by -0.9%, the biggest drop since June 2020
• Market activity decreased, with mortgage approvals returning to pre-pandemic levels
• The end of the Help-to-Buy scheme affected affordability and resulted in falling prices

December

• House prices fell for the fourth consecutive period, down -0.1% from November
• Average rent decreased slightly from November but remained higher than the previous year

Property Market Predictors

Following a lack of demand for expensive property and more buyers preferring affordability, many experts predict a continued drop in prices across many regions, with interest rates rising alongside.

If prices do slip in 2023, though, buyers should write off the property market as a viable option. Recent forecasts show that, despite significant drops in 2023, the market is expected to recover, with certain regions predicted to see price growth of 11.7% by 2027.

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