House prices are declining, but one expert thinks market psychology may prompt a quick recovery
House prices have been on a downward trajectory in recent months, with the latest Halifax data highlighting a fourth consecutive fall in property prices.
However, Rob Gill (pictured), managing director of Altura Mortgage Finance, suggests that demand may not suffer as much during 2023 as some are predicting.
Why? Many potential buyers will have learned their lesson during the last recession, and will know that property prices can quickly jump back up once confidence begins to return.
When does a market slump mean a buying opportunity?
“As we remember, what happened in 2008/09 – many people held off from buying and then house prices quickly rebounded before they had a chance to purchase property and therefore benefit from the rise,” Gill said.
According to the Halifax House Price Index, the average house sale price declined by -1.5% in December, following a 2.4% drop in November.
But Gill is expecting house prices to rise quickly again, and believes this will underline demand for property over the course of 2023 in older demographics.
“I believe some people may think that this is a good opportunity to buy, as history may repeat itself, and the decision to purchase property now could lead to a great financial benefit in the near-term future,” he said.
Market psychology may be different this time
Gill said that during the last recession he saw many people pull out of deals because house prices were predicted to fall further, which resulted in them missing out on the gains those properties saw once prices began to recover.
“Many people never bought because they were always waiting for the lowest price possible to become available; I think the psychology now has changed and people are likely to think ‘let’s just buy’,” he said.
The reasoning behind this belief, he said, stems from evidence seen in the last couple of years of the economic challenges the market has faced and the quick highs and lows of property prices.
“Therefore, some people may see it as a good opportunity to get on the ladder and potentially benefit from a rising market within the next couple of years,” Gill said.
What are your predictions for the mortgage market and economy in 2023? Let us know in the comments below.