DESPITE downwards pressure on prices, buyer commitment has improved, according to a new survey.
Property firm Savills surveyed 1,500 prospective buyers and sellers of prime property in the week to December 4, as well as more than 300 residential sales agents, to anticipate key market trends for 2023.
After a booming two years for the UK housing market, characterised by record house price growth and transactional activity, higher interest rates and the rising cost of living are expected to put downwards pressure on house prices and slow transactions in 2023.
But despite the increased uncertainty of recent months, the latest survey from Savills shows buyer commitment has improved since the firm’s previous survey in August, when it hit its lowest point since the start of the pandemic (April 2020).
This latest survey points clearly to the buyer groups most likely to be active in 2023: needs-based buyers in the early part of the year and increasingly the equity-rich lifestyle ‘right-size’ buyers as the year progresses.
Of those who gave a reason for moving, 41% were downsizing, 36% upsizing, while 23% were in the market because of a relationship breakdown or a bereavement, to reduce borrowing or because a change in employment necessitated a move.
Asked about their commitment to move, a net balance of +3% of all respondents said they were more committed to moving within the next three months and +12% over the next six months.
This rises to +20% for those moving for work, +32% for those moving because of a bereavement and +39% for those looking to reduce levels of borrowing. The most committed group, with a net balance of +48%, are moving because of a relationship breakdown.
These needs-based buyers express the greatest urgency to move within the first half of 2023.
By contrast, levels of commitment to moving amongst those looking to ‘right-size’ their homes, whether upsizers or downsizers, rise significantly over the next year or two.
“A return to a more stable political and financial environment following the tumultuous ‘mini-budget’ has led to a more positive outlook among potential buyers and sellers, despite the expectation of further economic uncertainty,” said Frances McDonald, Savills residential research analyst.
“While there are very clear headwinds, this survey suggests that there is a strong seam of demand in the market, but that it will be clearly split between those who need to move quickly and more discretionary buyers equally committed to moving but happy to bide their time over the next 12-24 months, to ensure that they get the right home at the right price.”
Some 77% of Savills agents agree that there has been a marked increase in the number of buyers coming through their doors looking to take advantage of expected lower house prices in 2023.
Savills has forecast average falls of -6.5% across the UK prime regional markets this year, but a net +10% increase over the next five years, pointing to an opportunity for those less reliant on borrowing.
More debt-dependent first-time buyers and mortgaged buy-to-let buyers are more likely to find themselves less able to transact until affordability improves, particularly until there is more certainty in the lending market, Savills says.
Ashley Rawlings, head of residential at Savills Wimborne, said: “The legacy of the pandemic – where buyers were driven by lifestyle choices and the birth of the ‘race for space’ phenomenon – is now permanently ingrained in the UK buyer’s psyche and expected to continue to shape choices in 2023.”
A vast majority (93%) of Savills agents agree that the value of home life is now more important than ever for their buyers.
This is translating into buyers taking a longer-term view when searching for the perfect home.
Fewer than one in 10 (9.7%) of buyers anticipate owning their next home for less than five years, while 60% expect to own for at least 10 years. A quarter (25%) of aspiring buyers are currently looking for their ‘forever’ home, with a 20+ year timeframe in mind.
“Despite a return to offices and normal social routine, country living also remains popular,” Ashley, pictured, said.
“When asked what type of location is most attractive, the majority of aspiring buyers opted for small towns, villages and the countryside, over cities and their suburbs.”
Agents also agree (58%) somewhere to work from home is still a key priority for buyers, Ashley said.
“Buyers are also continuing to prioritise proximity to parks and open spaces, and family, above transport, amenities and schools,” he added.