After almost three years of fairly busy activity, with a hot sellers market, experts are forecasting something of a cooldown for the UK’s property market this year– but perhaps not here in beautiful Suffolk, let me explain… 

 

Prices in our area are expected to see some resilience due to the lifestyle it offers continuing to prop up prices. “Nowhere is recession-proof but I do strongly believe Suffolk and north Essex is recession resistant,” says Tommy Newbigging, associate partner at Carter Jonas “We still offer one of the lower average house prices in and around that golden 60-mile radius of London. Covid shone a light on Suffolk and north Essex and both vendors and buyers are doing well in this county and enjoying how lovely it is to be here."

 

A dip in house prices and challenges to affordability.

The average UK house price increased by 23% between March 2020 and August 2022 – that's nearly £55,000 in cash terms.  This was, in part, due to the Stamp Duty holiday, as well as the 'race for space' which encouraged movers from further afield. 

 

Over the next 12 months, prices are expected to dip.

 

Halifax is forecasting a fall of around 8%, though the firm's homes director, Andrew Assam, points out that this would still leave the average house price at “roughly the level it was in April 2021, reversing only some of the gains made during the pandemic."  Buyers are likely to be cautious but still committed. Mr Newbigging adds that buyers are wanting to make sure they are making the right decision. " They’re asking a lot more questions than they have done over the past two and a half years – which is no bad thing," he says.

Peter Ogilvie, head of residential at Savills Suffolk, agrees that the overall market is more cautious than it has been – but says it appears to have stabilised compared to the end of last year, when the outlook for mortgage rates was far more uncertain.

“The situation is now clearer and buyers are willing to commit to a purchase where perhaps they may have been hesitant a few months ago. Those that wish to move can certainly do so, but there is still a lack of new stock.”

 

A recent poll from Fenn Wright discovered that 73% of potential buyers expected house prices to decrease this year, but Alan Williams, managing partner, said that of those, most still intended to buy a home in the first or second quarter and the remainder planned to purchase in quarters three or four.

“I think that tells us that we have a sophisticated buyer pool who are prepared to take a longer-term view on property prices because of the strong underlying demand for housing – especially in our region,” he says.

 

Fewer new-build homes are expected to sell.

The Help to Buy Equity Loan scheme wrapped up last year, and while other incentives are still available for first-time buyers, it’s unlikely they will match the previous scheme which, according to Government data, helped secure over 369,000 homes.

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Max Turner, head of new homes at Savills Suffolk, says it will be “interesting” to see how this affects the market – particularly when the rise in the cost of living and increasing interest rates meant there was very little activity in the last quarter of 2022.  “I suspect the number of transactions will be slightly lower this year,” he says. “That said, I’ve been anticipating a quiet start to 2023 but we’ve actually had the complete opposite.  "New enquiries coming through for sites we intend to launch early this year, footfall on sites where sales suites are open – all have been better than expected.”  He says the deposit unlock scheme – which can help buyers purchase a home with just a 5% deposit – is gaining some traction, although it’s too early to tell how it will compare to Help to Buy.

 

More demand on the rental market

With rising mortgage rates and the end of Help to Buy, it's expected that the rental market will see more demand, too.

“Prices will therefore naturally increase unless the Government intervene,” says Michelle Reedie, partner at Fenn Wright, and this will impact demand.

At the moment, becoming a buy-to-let landlord is made increasingly difficult due to high interest rates. “Now is a good time to invest for cash purchasers who will see a good return,” she explains, “however, if [you are] reliant on a mortgage, it is perhaps worth holding fire for a little longer to see what happens with interest rates.”

The supply of rental homes may be bolstered by those struggling to sell, however, as she says the team at Fenn Wright is “receiving an increase in calls from owners with vacant properties currently for sale looking to move them to the rental market for an initial period of 12-18 months.”