Annual Housing Review of 2022 and Outlook for 2023

Annual Housing Review of 2022 and Outlook for 2023

Propertymark reveals concerns and opportunities for the property sector and an analysis of market trends in 2022. Above all, we saw more people than ever looking to live in the private rented sector and seasonal peaks and troughs coming back, as well as a return to a buyer’s market by the end of the year that is the status-quo pre-pandemic.

What happened in the housing markets in 2022?

In the sales market, the average number of viewings per property fell across the year from April to December by 71%. We’re now in a market where only serious buyers are out looking for property, many buyers have decided upon a wait-and-see approach to the current economic turmoil. 

We have seen a fairly steady stream of new instructions on average over the year, with traditional dips in December. At the same time, the total number of properties for sale has steadily risen over the year.

This is due to a divergence between new property instructions and the number of homes sold primarily over the second half of 2022. A small drop in the total number of properties available for sale in December 2022 was also noted.

The largest shift over 2022 for the sales market is in prices agreed compared to initial asking prices. Starting 2022 in a sellers’ market and ending the year back in the longer-term normal of a buyers’ market. The seller’s market seen is unprecedented in our data which stretches back to 2013.

What's Happening to the Rental Market?

Rents have increased 12.1% in the last year on new lettings the rise is way ahead of the rate at which wages have increased, up 6% on average in the last 12 months.

New lettings account for a quarter of the rental market, one in four renters move home each year with the average length of tenancy being less than two years.

For the 75% of renters who choose to stay where they are, the picture is slightly more positive, as rents have risen by an average of 3.8% for this group, according to the Office for National Statistics.

However, the fact that renters are choosing not to move rather than face higher rents is compounding the supply issue for the market.

When will rentals get cheaper?

With demand up 46% and supply down 38%, rent prices are being pushed up fast.

That demand is being further exacerbated by rising mortgage rates, meaning more potential first-time buyers are continuing to rent for the time being.

But there’s only so much renters can afford to pay - and this is likely to have an impact on demand and the pace at which rents are rising in 2023.

The current momentum in rental levels is a growing concern for all private renters, especially those on low incomes, as it only exacerbates cost-of-living pressures.

If rental growth were to continue to run at 12% over 2023, the proportion of earnings needed to pay rent would be stretched even further to 37%.

This is not likely or feasible and we expect the growing unaffordability of renting to hit spending power.

This trend, supported by a modest improvement in available supply, could lead to rental growth slowing to 5% over 2023.

The quickest way to slow rental inflation is to boost rental supply.