Home Residential Property Anticipated downturn in UK home sales for 2023, mortgage costs deter buyers

Anticipated downturn in UK home sales for 2023, mortgage costs deter buyers

by LLP Reporter
31st Aug 23 2:55 pm

Projections indicate a notable decline in the volume of homes sold in the UK this year, reaching levels not witnessed in over a decade.

According to a report from property platform Zoopla, completed house transactions are set to experience a year-on-year drop of 21%, settling around 1 million in 2023, marking the lowest point since 2012.

The downturn is attributed to several factors, with the foremost being the impact of elevated mortgage interest rates on buyers’ financial capacities. As mortgage rates continue to climb, the ability of individuals to secure a property with a mortgage is predicted to decline by 28% in the current year.

However, the contraction is not solely driven by increased mortgage expenses. Beyond the sluggish economy, a sudden surge in housing supply has exacerbated the situation.

Recent data suggests a growth rate surpassing the five-year average, with a notable 18% uptick in listed homes for sale during the past four weeks, exerting downward pressure on housing prices.

Additionally, a migration of affluent individuals from the UK, spurred by the aftermath of Brexit, has played a role in the situation. The period from 2017 to 2022 saw the UK lose over 12,000 high-net-worth individuals due to migration. Projections suggest another 3,000 millionaires will exit in 2023.

Many wealthy financiers, hedge fund managers, investment bankers and lawyers have chosen recently Dubai as their new abode.

A comparison conducted by online property platform Housearch.com revealed the considerable cost-of-living disparity between London and Dubai.

Acquiring property in Central London demands a remarkable $16,800 per square meter, in stark contrast to Dubai’s more modest $3,900. This pattern holds true in peripheral regions as well, with the statistics standing at $9,800 compared to $2,300, respectively.

Renting a residence within central London’s districts like Chelsea, Westminster and Kensington commences at a baseline of $3,000 per month. In contrast, within the prime neighborhoods of central Dubai, like Dubai Marina, Downtown, and Business Bay, the starting point for studio apartment rentals rests at a comparably accessible $1,900 per month.

According to Housearch.com expenses for rent, groceries, transportation, and entertainment are on average 27.5% cheaper than their London counterparts. To sustain a comfortable lifestyle in Dubai, expatriates require a minimum monthly budget of $5,500, a notably lower sum compared to London’s $7,200.

Richard Donnell, Zoopla executive director said: “The housing market [in the UK] continues to feel the impact of higher mortgage rates and cost of living pressures. It’s resulting in weaker demand from buyers, fewer sales and very low house price growth.”

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