2022 was a tumultuous year for the UK property market.
The cost of living crisis and rising interest rates have put huge pressures on buyers, sellers and landlords alike – although talks of a full-blown property crash may have been premature.
Lots of this uncertainty is looking to carry over into 2023, with many unknowns remaining around interest rates and property prices.
But what does this mean for you and your rental property portfolio?
Here are our predictions for the 2023 rental property market.
1. Rising mortgage rates may create both prospects and worries
By now we’re all aware of the significant rise in mortgage rates that took place during 2022. Although these rates are predicted to settle and maybe even drop slightly in 2023/2024 to around 4.5%, their lasting effect will be felt by many.
If your rental property’s mortgage has a fixed rate, then you’ll likely have been shielded from these increases.
According to better.co.uk, the average 2 year fixed rate is currently 5.22% while a 5 year fixed rate averages out at 4.97%. So, if your fixed rate is due to end soon, you can expect big increases in your monthly payments. Even if you shop around for the best deal.
These large monthly payments may also influence many decisions to sell up and reduce their property portfolio. In fact, Sky News reported that in the last four months of 2022, the number of landlords selling their properties rose by 13%.
In extreme cases these high repayments might force some people out of the property rental market all together.
On the plus side, this may work in your favour, allowing you to purchase these properties with less competition.
2. Dropping property prices will bring opportunity for some
It’s the news we’ve all been waiting for – sector experts, Zoopla, are predicting property prices will fall by up to 5% in 2023.
Thanks to the spike in mortgage rates, demand in the housing market has decreased. As a result of this, property prices have already started to level out, even falling in some parts of the UK.
Although the high interest rates may sway many landlords away from purchasing more properties and expanding their property portfolio, cash buyers and limited companies may take advantage of this decrease.
There will be far less competition for buyers and sellers will likely want a quick sale. Cash buyers will also be able to purchase a property without any delays from a mortgage company, which works in both their favour and the seller’s.
3. High demand for rental properties means increased potential
Although house prices are expected to drop and interest rates are predicted to peak this year, these numbers will be nowhere near were they were even a year ago. Therefore, many first time buyers may hold off on buying their first home in 2023.
This will create high demand for rental properties as these people will still need somewhere to live, and many will opt to rent rather than live with their parents.
Demand for rental properties is already quite high. In fact, in November 2022, enquiries about rental properties increased by 23% from the same time in 2021.
This increase in demand will mean you, the landlord, will have a higher tenant pool to choose from.
Looking to add to your property portfolio in 2023?
Here at EasyLet Residential we’re here to help.
We know navigating the market can be daunting, that’s why we’re here to guide you every step of the way.
Our dedicated team have the skills and knowledge to help you find the perfect addition to your rental portfolio. Get in touch with us today. Simply call 01925 633011 or email us at firstname.lastname@example.org