Three Trends Set to Influence the Housing Market in 2023


Whether average property prices will fall by 10% or see further growth in 2023 remains to be seen. Depending on whom you ask, the next 12 months could see just about any eventuality become a reality for the UK housing market.

But what is safe to say is that when looking at the state of play today, there are several current trends set to influence the housing market in 2023.

Down valuations on the rise

The growing prevalence of ‘down valuation’ has been wreaking havoc on property transactions across the UK for much of this year. This is where surveyors place a value on a property that is less than its asking price, typically resulting in disputes between lenders and sellers while making it more difficult to close sales.

“As markets change, we can probably expect this difference in opinion to widen,” comments John Baguley at Countrywide Surveying Services.

As far back as the summer, many brokers reported encountering valuations that were as much as 20% lower than agreed property purchase prices, bringing major complications and conflicts into the negotiation process.

“There is a gulf between the reality of what buyers are willing to pay and what surveyors are willing to let go through,” said Jonathan Hopper of Garrington Property Finders.

This is one of many areas in which bridging finance could come into play as a potential solution, enabling buyers to sidestep the usual complications.

“In 2022, the most common use of bridging finance was to overcome a property chain break, surpassing its use to buy investment property,” said Stephen Clark

“We anticipate this will continue into 2023, as down valuations restrict homebuyers’ options, together with falling house prices, rising interest rates, and the cost of living.”

Auctions on the up

The popularity of auction property purchases has been gaining pace throughout the year as mainstream buyers and investors seek affordable homes and commercial properties via non-conventional channels.

Bridging finance provides buyers from all backgrounds with the opportunity to compete directly with cash buyers, enabling the completion of fast transactions while beating rival bidders to the punch.

“We have seen rising demand from auction buyers for bridging finance, enabling them to move at speed with flexible terms,” adds Stephen Clark

“Again, we expect this pattern to repeat itself through 2023 as more properties come up for auction.”

Total bridging loan volumes continue to hover around all-time highs, likely due to the fact that average monthly interest rates remain historically low.

“Some brokers are offering rates below 6% (annually), whereas the Halifax headline rate is above 6%. Bridging loans are extremely competitive at the moment,” commented Vic Jannels on behalf of the ASTL.

A quoted annual rate of 6% on a bridging loan would equate to 0.5% per month, leading up to a uniquely cost-effective facility when repaid promptly.

Putting the brakes on the chain breaks

Avoiding or repairing broken property chains has become the number-one use for bridging finance in the UK for the first time this year. For a broad range of reasons, homebuyers are turning to fast-access bridging loans to enable them to complete planned transactions in time-critical situations.

“Borrowers who have had mortgage products withdrawn with little or no notice or have lost their sale due to their buyers no longer fitting mortgage affordability criteria have turned to short-term funding solutions to ensure their purchase can go through as planned,” says bridging finance expert Stephen Watts.

Following several consecutive years at the top of the table, purchasing investment properties fell to second place in the rankings. Having accounted for 24% of all bridging loans issued in Q2, just 16% of transactions completed in Q3 were for investment property purchases.