Many experts are predicting a tough year for house prices in the UK in 2023. Rising interest rates are likely to cause values to dip. Halifax and Nationwide estimate that the drop could be 5%. Lloyds is more pessimistic, predicting an 8% decline. However, new research suggests a number of areas could be immune to the contraction. As one of the leading providers of block management in the City of Westminster, we want to have a look at them.
Can areas be immune?
While the overall outlook is negative, not all areas will see a fall in prices. Some can have insulation against drops in value. For example, it may be areas where a high percentage of people own their property outright or only have small mortgages. That means they don’t feel the impact of interest rises as much and likely won’t need to sell.
Some spots also have protection against potential drops because of their sheer popularity. Areas with high performing universities and schools tend to retain demand. As a result, they may not be as vulnerable to dips.
The number of first time buyers in an area can also have an impact here. Sadly FTBs tend to feel the strain of interest rises the most. They usually have bigger mortgages and less equity in their homes. Plus, they can be in a situation where they are already spending a high percentage of their monthly salary on the mortgage. A lack of savings can have an impact too. All of this can combine to mean they have to sell.
Which areas are most likely to be immune in 2023?
The data takes a look at just under 100 different spots in the UK to see which could have immunity to house prices dips. It considers factors above as well as the recent year on year change in values.
According to the findings, Kensington and Chelsea is the most immune area. It has a combination of a very small number of FTBs and a low debt to equity ratio. In fact, over 27% of homes in the area are owned outright with no mortgage. The area also felt the sting of a drop in prices already, falling 7.1% in the year to November 2021. So, they may have made the necessary adjustment and not fall again.
As we said above, we are a top provider of block management in the City of Westminster. It is therefore great news that this area is second in terms of immunity. It also has a low number of FTBs and low debt to equity. Prices may have already adjusted too, falling by 5.7% in the same period to Nov 21.
There are several other notable locations on the top ten list. Camden was third and always seems to be popular. Swansea (4th), Oxford (5th), York (6th), and Cambridge (7th) are all university cities where demand for housing tends to be consistent.
Weak spots
Unfortunately there are a number of spots where the fear of a dip in prices is more likely to become a reality. Generally these are areas with a higher number of FTBs and a larger debt to equity ratio. Many also had big rises in house prices since the pandemic. Price cooling is therefore more likely.
The weakest spot according to the data is Crawley. It is a very interesting commuter town that many people chose because of the closeness to London and Brighton. In the year to Nov 21 house prices grew by 11%. Many FTBs choose to move here. There is also a 21.4% debt to equity ratio. That means cooling is due and more people are likely to feel the bite of interest rate rises.
Milton Keynes is also an area that could have a tough time. It has more FTBs than Crawley but a smaller debt to equity ratio (19.7). However, the house price rise was much higher at 17.4%. A dip could bring it back to where it should be.
Talk to us if you need block management in the City of Westminster
A lot of people will need to keep an eye on interest rates and house prices in 2023. Investors in particular might be in a strong position. They could benefit from a dip in prices in areas that need to cool. It may provide an opportunity to buy with a nice discount.
If you are an investor, Finefair Ltd offers some wonderful services that could help you. They include managing different properties and arranging guaranteed rent. Here you can get convenience, save money, and protect your income.
So, speak to us if you want to learn more about block management in the City of Westminster or other services in different parts of London. We are happy to advise and show why we are the right option for you.
