24 May Market Update: The property industry in 2023
Since the turn of the year, we’ve seen a whirlwind of changes and updates throughout the property industry. So, as we approach the halfway point of 2023, we’ve taken a look back at some of the key elements affecting the market, alongside some projections for the rest of the year.
1. Property Prices
As widely expected, we saw property prices stagnate throughout early 2023 due to a combination of rising interest rates, the impact of the cost-of-living crisis, and an increase in inflation. During Q1 we saw house prices continue their downward trajectory from Q4 2022 with a combined negative growth of -2.7%. However, according to Nationwide’s house price index, a rise in prices of 0.5% during April shows tentative signs of recovery. *
Projection: If we see a fall in interest rates and inflation during the second half of 2023, this could support a more optimistic recovery in housing market activity and subsequent prices.
2. Transaction Times & Volumes
We have seen a steady decrease in transaction times throughout 2023 so far, with average transaction times improving by 18% between January and April. This, in part, can be attributed to greater conveyancer availability due to reduced transaction volumes compared to 2022. **
Following September’s mini-budget, we saw mortgage and interest rates increase, leading to a decline in residential property transactions during January and February of this year. Despite this, from March we’ve seen signs of market recovery with non-seasonally adjusted transactions increasing by 26% when compared to February. ***
Projection: Based on their current trajectory, if interest rates fall in Q3 & Q4 of 2023 we’re likely to see a month-on-month rise in transaction volumes. In terms of transaction speeds, those Estate Agents that implement effective sales progression strategies will see transaction times stabilize or even continue to fall.
3. Technology
The emergence and increasing utilization of various forms of technology are influencing the property industry at an ever-greater rate. Since the back end of 2022, there has been a particular spotlight on Artificial Intelligence. With increasing industry applications such as document reviews and property description writing, AI has been a widely debated topic so far in 2023.
The trend of technology utilization has also led to more Estate Agents opening up to the use of outsourced providers this year. Following on from the increased adoption of video calls that we saw during the pandemic, coupled with an understanding from many that skills/expertise should be considered alongside geographical location, more agents are reaping the benefits of accessing such providers.
Projection: Technology will always have an influential place in the property industry, and we expect this to continue throughout the remainder of 2023. However, it’s likely that in many cases a ‘bionic’ approach, combining human industry expertise and technology efficiencies will provide the best results for Estate Agents.
4. Government Policies
Changes to government policies and their resulting implications for the property industry have been highly impactful since the back end of 2022, to say the least. Particular attention has been drawn towards compliance and anti-money laundering during 2023 with total fines for breaches in Q1 hitting over £300,000 (equating to 44% of all AML fines seen in the previous year).****
Projection: With the HMRC issuing a promise to crack down on illicit activity in the property industry, we’re likely to see further increases in fines for those found non-compliant due to poor procedures throughout the rest of the year.
* https://moneyweek.com/uk-house-prices-rise-in-april
** ASAP transaction time statistics – January 2023 – April 2023
**** https://www.estateagenttoday.co.uk/breaking-news/2023/1/aml-oversights-push-up-agency-fines–claim