As we move into 2023, we have taken a look at what we expect from the property industry during the coming year, how Estate Agents can prepare, and why there is reason to be optimistic about the months to come.

What will the market look like in 2023?

Property Prices – The fallout from the mini-budget in September last year, combined with the current cost of living crisis, is expected to result in the halt of house price growth throughout much of 2023. However, this doesn’t necessarily signal looming price drops throughout the year. While average property purchase prices did slightly drop towards the end of Q4 2022, Rightmove has reported that asking prices have marginally risen so far during 2023.*

Transaction Volumes – It’s likely that the number of transactions in the market will normalize, returning to pre-pandemic levels. Despite a reduction in industry transaction numbers during Q4 in 2022, HMRC data has shown that the numbers we’re seeing are still in excess of those during the same period in 2019.**

Transaction Times – Average property transaction times hit an all-time high during the pandemic. These are expected to improve somewhat in 2023 due to reduced transaction volumes. However, sellers, buyers, and their Estate Agents may still experience average transaction times in excess of 150 days.

Lenders – While the cost-of-living crisis is expected to tighten its grip on households up and down the country, there is the potential that flexibility from lenders will help to slightly ease the burden for some. The introduction of measures such as extended lending periods for those in troubled times, and repayment holidays, similar to measures introduced in 2019/20, will help to avoid repossessions.

What can Estate Agents do to prepare for the 2023 market?

Flexibility – Agents of all sizes should make sure they have the flexibility to respond to a variable market while remaining competitive. Keeping overheads tight and making use of scalable, on-demand services that provide this flexibility, such as outsourced experts, could prove essential in optimizing performance for many Estate Agents.

Cashflow is King – When it comes to hard-to-predict market conditions, very often, cashflow is crucial.  Ensuring pipelines are turning over as efficiently as possible and putting cash in Agents’ pockets sooner is a great way to combat any uncertainty. We believe that deploying experts in pipeline turnover, whether that be a dedicated internal resource, or an external provider can greatly improve Agents’ cashflow.

Speed – The faster a transaction completes, the less chance it has of falling through and the sooner an Agent is paid. Developing an effective sales progression strategy either via a dedicated in-house sales progressor or an outsourced specialist will be the key to optimizing completion times for many Estate Agents.

Reasons to be optimistic about the industry this year

While it’s likely we will see purchase activity slow down initially this year, we may see growth in other areas of the market such as remortgages if rates fall. In the past, periods of growth in remortgages have been closely followed by some growth in purchases.

Also, this week lenders are confirming that they expect mortgage rates to soon reduce to levels similar to those seen prior to last September’s mini-budget. There is a hope that these reductions will be passed on to borrowers in the near future, stabilizing transaction volumes in the market.

It is clear this year won’t be without change but the key drivers for sellers and buyers to pursue transactions such as the need for more space, changes in family circumstances, and the desire to get onto the property ladder will still remain.  We believe that the Estate Agents that focus on driving transactions through quickly while managing fixed costs, will be the winners in 2023 and become stronger as a result. 

*Rightmove – www.rightmove.co.uk/news/articles/property-news/new-year-bounce-jan23

**HMRC Report – www.gov.uk/government/statistics/monthly-property-transactions-completed-in-the-uk-with-value-40000-or-above

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