Thinking of moving in 2023? Here's what you need to know about the market

2022 – it was a seismic year in the property market with significant political and economic earthquakes rocking the industry as well as more specific aspects coming into play, such as the new law on interlinked fire alarms for all Scottish homes that came into force on February 1^st 2022.

Based on last year, it would be hard to lay any big bets on what may happen in 2023 with any confidence, but here are our thoughts on what could be key topics this year that may occupy the news space.

Market forces

Rightmove forecasts that, depending on the type of property, asking prices will, on average, drop by 2% in 2023*. As this is a national average housing market activity and house price changes will vary depending on where you are selling or buying. Overall, we can expect to see a more level market with fewer peaks and troughs.

As buyers wait for prices to drop and sellers look for the closest price match to their desired sales price, Rightmove suggests that it may take buyers in England around 60 days to complete the buying process on their new home. In Scotland, this process tends to be faster.

For landlords, there are many considerations they will need to weigh up when it comes to continuing with buy-to-let and thinking about buying additional properties. On the one hand, letting a property has more challenges than ever, with the increased cost of living, rising mortgage costs and additional legislation to cope with.

However – demand from tenants for a place to rent continues to rise, fuelled in part by many first-time buyers putting plans on hold and opting to rent instead until the economic climate improves their personal circumstances. This demand is far from being met by the current supply of available rental property. Not only does this mean that letting a property is quicker than ever, but rental prices are being pushed upwards to record levels, currently averaging £1,174 across the UK and £840 across Scotland^. The chance to generate a good yield is still there for landlords, if they invest in the right properties and locations.

Mortgage costs

Following the Liz Truss mini-Budget in September, the end of 2022 saw three increases to the Bank of England base rate which resulted in higher mortgage rates (and associated costs of borrowing). Currently the Bank of England base rate sits at 3.5%, and whilst some analysts are predicting further rate rises in 2023, the peak is anticipated to be lower than previous industry forecasts.** Anyone looking to remortgage this year may experience cost challenges still, however, there are signs of more stability in the mortgage market compared to 2022, with a wider range of mortgage products.*** However, base rate changes and lenders' reactions will need to be closely monitored when the Bank of England’s Monetary Policy Committee next meet on 2nd February 2023.

Lettings legislation

Scotland’s rent freeze and evictions pause legislation outlined in the Cost of Living (Tenant Protection) Act 2022 will be reviewed by the Scottish Parliament in March 2023 and may be extended to September 2023 and again to March 2024.^^^

Another topic that will remain ‘hot’ for landlords this year will be the Energy Efficiency (Domestic Private Rented Property) (Scotland) Regulations ‘pencilled’ for 2025. Currently, properties in the private rented sector need to have a minimum energy performance rating of E but the government is proposing that this is raised to a D rating****. This would impact a large number of landlords and require many properties to need a significant amount spent on them to bring them up to scratch. It would be wise for landlords to factor in improvements, for instance, to help spread the cost, even if at present there is no definite confirmation of the change. In the current world where energy efficiency and being environmentally friendly are high on the political agenda, it would be a surprise if changes to standards were not to be introduced at some point.

Whether you’re looking to move, buy or sell in 2023, the property market could provide you with various opportunities as it continues to show a consistent level of activity throughout.

Correct at time of publishing – 19/01/23