UK property market trends for 2023 indicate an increasing demand for energy efficient new build city centre rental homes that attract young professionals looking to save on energy bills while living close to transport links.
However, rising mortgage rates may deter potential buyers. With strong employment numbers in place and no sign that the housing market will collapse anytime soon.
Demand for rental properties
After the Covid pandemic and subsequent lockdown period, city centre apartments have seen a resurgence in demand as people return to town centres for work and leisure activities. Search data provided by Rightmove indicates that interest in apartments overtook terraced houses as early as January 2022.
Investment properties offer excellent returns, providing a steady income stream with far lower risks than savings accounts and keeping pace with inflation. Many landlords view their rental properties as long-term investments – some even considering them an alternative pension scheme solution.
Rising mortgage rates have forced would-be buyers to postpone their purchases. This may cause rents to increase as landlords increase rental rates to cover rising costs. Property experts predict that demand will still outstrip supply of rentals – which should help to stabilize housing prices; although, it will take time before we see clear signs of recovery in housing markets.
Affordability
Affordability is often an obstacle for first-time buyers. Rising house prices, low or stagnant wages and excessive debt levels have combined to make homeownership an unachievable dream for many people. Furthermore, rising mortgage rates have increased mortgage repayment costs significantly; and with government enforcement against private landlords having led many buy-to-let investors out of the market altogether, these issues only compound over time.
An increased demand for city centre properties will likely fuel rental market expansion in 2023, driven by rising energy efficiency standards in new-build apartments and convenient commuter routes to work. Students also drive rental market expansion; London has seen a spike in professional managed student accommodation near public transit systems.
Overall, affordability has improved since 2021 in most regions; however, some parts of the country remain an issue. By 2022, 23 areas had homes selling for less than five times workers’ earnings – an improvement on 12 areas which sold homes at this price in 2021.
Supply of homes to rent
London’s lettings market remains highly competitive due to affordability challenges in sales markets as well as rising tenant demand for city centre rental homes close to public transport for easy commutes.
However, supply of rental homes will likely remain limited this year due to limited new listings and higher mortgage rates that prevent many prospective buyers from qualifying for loans – likely leading to rents rising further this year.
Search data from Rightmove has revealed that, since the pandemic concluded, interest in apartments for sale has outshone interest in terraced houses for sale, reflecting homebuyers’ trend of hybrid working; homebuyers want easy access to both urban and green space environments while rural locations continue to gain attention as more people work remotely on multiple days each week.
First-time buyers
Gaining entry onto the property ladder is a dream shared by millions across the UK, yet with rising mortgage rates and tightening affordability tests making property investment increasingly challenging for many people.
With London and South home prices outstripping earnings, first-time buyers are finding it challenging. Luckily, this trend is changing; as interest rates continue to increase, first-time buyers are seeking more affordable options in North East Scotland and Scotland.
tenants are attracted to city centre rental homes that feature lower energy costs and easy access to public transit, drawing them in as they anticipate lower energy bills and better public transit connections in 2023. We expect this trend to remain steady.
