2023 Property Market Predictions - What Will Happen to the UK Housing Market in 2023?

2022 was a fantastic year in terms of capital appreciation as house prices snowballed over the course of the year.

The average house price in the UK as of October 2022 was £296,000. When compared to the average price of December 2021, £275,000, you can see that this is a sizeable level of growth.

Some areas of the UK saw even higher levels of growth, such as the North-West. Thanks to property hotspots like Manchester and Liverpool, this area of the UK experienced annual growth of 16.1%, significantly higher than the national average.

However, according to property market predictions, in 2023, it is unlikely that this period of prosperity will last.

Two of the main reasons behind this rapid growth are how the UK recovered from the effects of the COVID-19 pandemic and the high demand for property combined with the low levels of supply.

However, with us now being two years post-lockdowns, the economy has mostly recovered from COVID-19 and its effects.

While there is still high demand for housing, the rapid rise of house prices has met with the cost of living crisis that the UK is currently experiencing, making housing unaffordable to many at the current rate of inflation.

Therefore it is unlikely that house prices will continue to grow at the rapid rate that we have experienced so far in 2022 and that growth will slow down in 2023.

In fact, due to the cost of living crisis and the tumultuous state of the UK economy after the political upheaval we experienced in the latter half of 2022, it would not be surprising to see house prices fall a small amount in 2023.

The latest forecast from Savills predicts that house prices could fall by up to 10% across the UK in 2023, but this is no cause for alarm.

Instead, think of it as a natural reset button for the housing market after a chaotic 2022, where housing will become more affordable for many. Savills’ forecast also predicts that house prices will rise overall by 6.2% by 2027, so if you see house prices fall in 2023, don’t panic and consider it a permanent change.

In fact, for investors, 2023 presents a prime opportunity to invest in UK property while prices are low but set to increase.

Back in 2020, house prices in the UK saw a temporary slump during the beginning of the COVID-19 pandemic, with average prices falling by 0.6% between March and April. By the end of 2020, average UK property prices had risen to record levels and continued to rise ever since, meaning investors had made strong capital growth returns.

If you want to secure the best capital growth in the long term, consider a 2023 UK property investment.

Throughout 2022, the North-West was one of the best areas to invest in property for several reasons.

Major cities like Liverpool and Manchester offered growing young populations, some of the best universities in the UK, high rental yields and affordable property prices.

Liverpool saw house prices rise by over £18,000 to just over £180,000 in a 12-month span, a rapid growth that remains highly affordable compared to other major UK cities.

Manchester similarly saw strong growth. As one of the largest cities in the UK, Manchester’s property prices rose by 13.6% from October 2021 to October 2022, which is above the national average for the same period.

When you consider this in combination with the huge student populations of both cities, the major regeneration schemes such as the Baltic Triangle and the Spinningfields project and the great job opportunities for young professionals, it’s easy to see why many investors chose the North-West in 2022.

The good news is that despite the weathering that the UK housing market will potentially endure in 2023, the North-West and these cities, in particular, are expected to come out the other side in a strong position.

The Manchester and Liverpool property market forecast for 2023 is strong. Savills predicts that the North-West will see a 5-year growth of 11.7%, the highest level of growth of any region in the UK. 

This is great news for investors, both experienced and new, as it means the North-West will remain one of the best areas for investing in UK property for the foreseeable future, while those who have already made the jump can be assured that their investment portfolios will be secure.

JLL’s forecast also predicts that Manchester will be one of the few UK cities to see positive growth in 2023, as it forecasts that the city will see sales prices grow by 1.5% over the course of the year. This is one of the highest levels of growth that they predict for any UK city.

With these industry experts predicting that the North-West will remain a property investment hotspot for 2023, you can safely bet on buy-to-let properties in Liverpool and Manchester in the new year.