Cost of living crisis set to continue into 2023: How to navigate the housing market
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The cost of living crisis was one of the major talking points of 2022, as governments all over the world struggled with rising energy prices and inflation. While many people will be glad to see the back of the previous year, things may not be as promising for 2023, with the cost of living crisis looking set to continue.
For homeowners and buyers, some of the biggest effects have been felt through rising interest rates and a market that was still destabilised as a result of the pandemic. But does this mean buying a property is out of the question this year? It doesn’t have to be if you play your cards right.
House prices predictions
Among some of the key property market predictions for 2023 is that house prices will fall, although only marginally so. House prices have increased significantly in recent years thanks to increased demand, so potential buyers could get a better price for property this year with prices dropping by up to 5%. While it’s difficult to truly predict changes to house prices, news of a potential decrease could give hope to buyers who have felt priced out in recent years.
Alternative properties could be the answer for those looking to move
While many people may decide to wait out the next year before looking to buy a property, it could be worth considering alternative property types that could present a much more affordable deal, and still help buyers get on the property ladder. Homes in need of renovation, such as those bought at auction, could be one way to save money on a property, as well as increase its value over time. Modular homes are another affordable solution to help avoid some of the fluctuating costs of buying a home. Buyers may need to consider a variety of options to ensure they can buy an affordable property in 2023.
Navigating unpredictable interest rates
Interest rates are another factor impacting both homeowners and potential buyers in 2023. Mortgage rates hit unexpected highs towards the end of 2022 and while there has been some decline in rates since peak increases in the autumn, it’s going to be a while until we return to the 1-2% mortgages that many homeowners have taken advantage of in recent years. The interest rate will depend on the Bank rate set by the Bank of England, with the next announcement due in early February. For buyers who are uncertain of which type of mortgage they should pursue, an appointment with a mortgage broker could provide some valuable guidance.
While the cost of living crisis will impact affordability, the potential reduction in house prices and interest rates could provide some relief to those looking to buy in 2023. The first few months of the year could help provide some answers as to how the housing market is going to go, so buyers may want to persevere before committing to a firm decision.