What’s in store for the Cornish Property Market in 2023?
What happened to Cornwall’s Property Market in 2022?
2022 appears to be the year of two tales. At the beginning of 2022, the market was buoyant, with Nationwide quoting that there had been house price growth of 26% between June 2020 and September 2022. However, since the mini budget in September 2022, a lot of things changed for the housing market, mostly an increase in uncertainty.
Inflation has risen from an almost all-time low of below 1% at the beginning of 2021 to nearly 11%. Inflation is one of the key factors which pushes house prices up, with the average UK house valued at £24,000 more in 2022 than in 2021 (trading economics). Although that can be viewed positively if you are not looking to sell your house, for those who are, the main problem is that although your house is deemed to be worth more, is anyone going to be able to pay more for it?
Inflation and interest rates are intrinsically linked, meaning that when inflation rises, interest rates tend to rise as well. Interest rates have risen from an average of 1.75% for a two-year fixed mortgage in 2021 to close to 6% towards the end of 2022. This has a negative effect for buyers as rising rates make homes more expensive.
A positive outcome from the mini budget was the reduction in stamp duty thresholds, with all types of property investors looking to gain from the changes.
For those looking to buy in 2023, find out how using a property agent can help save you even more time and money.
What to expect in 2023
With strong macroeconomic challenges facing the country now, it is of no surprise that the market has slowed down and many people have been left in limbo as to whether to sell or stay put.
Savills predict that house price growth will be negatively impacted across the South West by 10% but with a five year view of growth of 6.2%.
As in all sectors of life, often when there appears to be a negative situation a positive can be gained from it.
For example, perhaps you are on a fixed mortgage and can “port” the mortgage over to a new property gaining from a potentially lower purchase price. Or perhaps you are able to purchase in cash, in which case you would be able to ride out the fluctuations in the market.
What does this mean for those who want to move to Cornwall in 2023?
Whilst the government may have started to address the crisis of confidence in the financial market, the compound effect of raising taxes, high borrowing costs, and higher living costs will all impact prices for the rest of this year and into next.
This being said, it is very unusual for purchasers to be purchasing a house for the short-term; many are looking for their forever home or at least a five-year-term home. If this is the case, it allows for any imbalances in the market to even out.
Ultimately, the degree to which this creates a threat or opportunity depends on individual buyers’ attitude to risk.
People are still looking to move to Cornwall. With home/remote working now permanently possible for many, the practicality of the move is even more alluring than pre-COVID times. Many people had not made the move but now, even with rising interest rates, Cornwall is still deemed an affordable county compared to other areas.
People are still looking to upsize/downsize or change their lifestyle locally. When financial times are harder, countryside activities provide a much cheaper alternative and better quality of life for people.
There are other factors that can play a part in this as well, and if you are working with a buying agent, there are a few questions to ask to make sure they are working in your best interests, which can make a difference to the property you purchase, and how much you end up paying.
To find out more about the distinct characteristics of some of our favourite places in Cornwall, read our area guides.
Ultimately there is still a huge imbalance in supply and demand in the Cornish housing market especially at the prime end of the market. People will always be attracted to the offerings of Cornwall and with little prime supply available, this inevitably puts pressure on guide prices. Savills in Cornwall are still seeing many of their current house sales go over the guide price with plenty of interest from prospective buyers. Furthermore, Savills estimates that two-thirds of people who are buying at the prime end of the market are buying in cash.
Before any purchasing decision is made, it would be advisable to speak to Relocate to Cornwall for tailored advice on your personal buying situation - we offer a range of services to suit your needs, so you can be sure that you are getting bespoke support tailored to you.
We hope you found this article helpful. In the meantime, if you would like to discuss your own property plans, please feel free to get in touch with us.
