PROPERTY
Property : Cruise or crash ? What does the road ahead look like ?
2022 saw a cooling of residential and commercial property markets as the country continued to weather the perfect economic storm .
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RESIDENTIAL Higher borrowing costs and concerns about affordability had an inevitable impact on first-time buyers , with a decrease in viewings and below-asking-price offers returning .
The Nationwide House Index reported that house price growth in the year to December was 2.8 per cent , dramatically down from the 4.4 per cent outlined in November . December was the fourth consecutive monthly price fall , and the worst run since 2008 .
With supply continuing to outstrip demand , some experts are predicting a
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continued weakening of the residential property market ( excluding rentals ) throughout 2023 .
Others , however , say there is reason to be optimistic . David Hannah , Group Chairman at Cornerstone Tax , has maintained confidence since the first calls for a predicted crash in Q4 of 2022 . His view is that the market will in fact experience growth in 2023 .
Early signs show this may come to fruition . Rightmove has reported an increase in asking prices on UK homes by 0.9 per cent throughout December .
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David Hannah said , “ In the first part of this year we will see slow demand . Only those people forced to sell will see a slight fall in prices ; however , over the whole of 2023 , I expect to see low to mid to singledigit growth over the UK property market - between 5-8 per cent . Despite the negative headlines that we have been seeing , there is an underlying pressure on the market , and that is leading to upward pressure on prices .” |
COMMERCIAL Higher borrowing costs , financial market volatility and increased construction costs have also taken their toll on the commercial property market in recent months .
Whilst demand for general office space continued to fall , prime office space continues to be sought after . Occupancy rates for retail property held steady and demand for industrial property continued to outstrip supply .
Overall , values have generally fallen for all types of commercial property .
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VIEW FROM THE REGION ' S EXPERTS
Lisa Parmley , FOUNDER AND DIRECTOR
Lisa Parmley Mortgage Management
In 2022 we have seen far less applications due to a lack of confidence in moving home and customers worrying about the increase in interest rates and property prices falling .
The interest rate increases over the year have impacted everyone reviewing their mortgage in some way .
The biggest challenge has been for buy-to-let borrowers .
Some lenders stopped offering BTL products all together for a period of time and the remaining lenders increased their stress test calculation . This meant that for existing mortgages , the only option was to stay with their current lender . For purchases , a typical deposit ( previously of 25 per cent ) increased to 35-40 per cent .
For more info : www . lparmleymm . co . uk
Daniel Smethurst , DIRECTOR
Smethurst Property Consultants
Despite the current economic backdrop , we are continuing to see a steady flow of enquiries for both office and industrial stock although it is fair to say that the decisionmaking process is becoming more protracted . Whilst it is probably too early to tell what the true impact of the Bank of England ’ s autumn statement will be , contrary to what is being reported the sky does not appear to be falling in .
We should not lose sight of the fact Swindon boasts an extremely diverse economy and whilst there will undoubtedly be some economic fallout , companies will continue to make important business decisions in accordance with their directional setting . We do anticipate a more guarded approach and the global costs of moving will be more heavily scrutinised .
There has been a strong demand in the market for better quality workspace as employers seek to provide an improved working environment for their employees . ESG credentials appear to be high on the list of many occupiers which goes hand in hand with the flight to quality we have seen over the last couple of years . We do anticipate that those landlords / tenants that continue to invest in their office space will continue to see the benefits .
Headline rents have increased on both Prime and Secondary stock and we are not witnessing the knee-jerk reactions to incentives that we have seen in the past . Incentives have not moved out and in some instances , tenants are trading incentives for more favourable lease terms .
For more info : www . smethurstpropertyconsultants . co . uk
Alison Williams , PARTNER , COMMERCIAL
Carter Jonas
Standing stock remains in short supply and the market will remain tight in 2023 , given the ongoing robust level of occupier demand and limited development coming on stream during the year . We may see more second-hand units coming back to the market as some occupiers scale back operational portfolios at break or expiry , but the impact on capital values is likely to be unchanged with pricing holding up well .
Supply constraints will exert some upward pressure on rents , but industrial occupiers face an uncertain economic environment and significant costs pressures ranging from wages to energy , as well as higher business rates bills from April . We , therefore , expect to see only subdued rental growth during 2023 . But the mere fact that we do not expect rents to fall , given the challenging economic outlook , illustrates the resilience of the sector .
Developers have been challenged by rising build costs and supply chain problems , together with the increasing cost of debt and uncertainty , which has impacted investment yields , although we still have some confidence in the investment market . The extent to which construction activity recovers will partly depend on how quickly the rate of build cost inflation eases . An additional challenge for developers is to put future-proofing and flexibility at the forefront of design , with energy efficiency , particularly in the spotlight . For those that get development right , we think 2023 can be a profitable year .
For more info : www . carterjonas . co . uk
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