There are growing signs that housing market activity may be close to a trough. The decline in mortgage rates over the past couple of months has led to a small improvement in affordability and a rise in homebuyer sentiment, albeit from a record low. Corroborating this, mortgage applications for home purchase have ticked higher in the past couple of months, which should feed through to higher sales. But any recovery in housing market activity this year will be tepid. Stretched affordability, a weakening economy and falling house prices will all weigh on activity. As a result, we expect 2023 will be the weakest year for sales since 2011 and for starts since 2014. Meanwhile, we think house prices will need to fall by a further 6% or 7% to bring affordability back to a level that will support more ‘normal’ levels of demand.
Drop-Ins: Property markets in 2023: We’re holding two special 30-minute briefings on the 2023 housing and commercial property outlooks on Tuesday, 17th January, covering first the UK and Europe and then the US. Click below to register for either or both sessions:
UK/Europe outlook (09:00 GMT/17:00 SGT)
US outlook (11:00 EST/16:00 GMT)
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