How bad can it be? Predictions for 2023 have been universally miserable. Even if inflation and interest rates stop rising, there’s no pundit out there who believes consumers, homebuyers, investors or business owners will be cracking open the Mayerling brut rosé recommended below in 12 months’ time and saying: ‘Phew, that was tough but I feel great about 2024, so pull my cracker and I’ll put my paper hat on.’
And I’m not here to buck the trend. We’re in for a long haul of budgets squeezed and projects deferred. Let me nevertheless rebut one doom strand with a plea for common sense, provoked by a Telegraph piece headed: ‘Why house prices will nosedive in 2023… Property experts predict a plunge as buyers are priced out and sellers panic.’
Top marks to the unknown subeditor for ‘nosedive’, ‘plunge’ and ‘panic’ in one strap. But what are we really talking about? Nationwide’s UK house price graphs, taking Q1 2020 as 100, peaked in Q3 2022 at around 127 for houses and 118 for flats: irrational surges since the onset of the pandemic, before a Q4 droop. Nationwide itself foresees a 5 per cent further fall in 2023, agreeing with Halifax and Zoopla but a touch gloomier than Rightmove – four sources that between them have access to all the UK housing market data there is. Meanwhile, most mainstream economists now expect interest rates to peak at 4 per cent, affecting a minority of mortgage-holders unlucky enough to be coming off fixed rates at the wrong time. And yes, inevitably, house sales will be sluggish. But a sellers’ panic? I seriously doubt it.
What we’re looking at is the loss of, say, half the pandemic price spike and with it a slight positive shift in affordability to offset an uptick in long-term mortgage rates. So let’s calm down on this one and if I’m wrong (yes, I sometimes am) I’ll eat my paper hat.
But what if there’s a black swan – the financial shock, outbreak of war, revolution, killer bug, nuclear accident or cyber wipe-out that knocks all conventional predictions aside and which only the off-grid lunatic fringe will claim to have been expecting? Your guess is as good as mine, but if it happens I’d say there’s a 60 per cent chance it will come from China, 30 per cent from Russia, 10 per cent from anywhere else.