The UK property market remains uncertain. A combination of rising mortgage rates and inflation are impacting affordability significantly.

As a result, homebuyers have become more value-minded – particularly outside prime central London – yet interest in property remains high.

1. The Race for Space

Once the pandemic began in 2020, people quickly fled cities and commuter towns for rural and coastal regions, sparking an exodus that resulted in house prices skyrocketing in areas such as Norfolk, Kent, and the South West. Since many workers still work from home several days each week, demand remains strong for properties offering ample room, particularly those that can accommodate separate workspaces.

Halifax data indicates that three quarters of the 20 areas with fastest-rising property prices outside London are expected to experience rapid property price appreciation between 2018-2023, though evidence may suggest demand may be slowing as mortgage rates increase and housing markets adjust to reflect this reality.

Zoopla’s property website indicates that house enquiries have decreased following the mini-Budget in September by 47pc for houses and 42pc for flats – as mortgage rates are now higher and maintaining property costs more.

Although London has not seen significant price decreases over the last 30 years, interest in luxury properties will likely remain strong; those seeking to maximize investment potential will pay a premium for apartments located in its most sought-after areas.

But even this could be short-lived as competition for space continues to subside and mortgage rates increase. Once households take out a mortgage loan they are locked into it forever; making switching providers much more costly than simply moving house.

2. The Rise of Build-to-Rent

Historically, property trends were marked by rising house prices and an intense competition for space. But high inflation and rising interest rates have impacted significantly on the market and could cause house prices to decrease in 2023; nevertheless, high demand will likely cushion any major shocks to ensure that it does not collapse completely.

As the cost-of-living crisis deepens, people will look for ways to cut household bills. This could lead to property trends changing in 2023 with people opting for newly built properties with higher energy efficiency ratings – this may particularly apply in areas where regeneration schemes have been invested in.

Recent search data from Savills indicated that regional reservations for new build properties increased by 7% in Q1 2022 due to rising demand for apartments – this trend is likely to continue as more homebuyers look for ways to cut monthly outgoings.

However, despite the rise of build-to-rent properties, UK housing markets may still experience slowing. This is likely because mortgage rates are expected to increase in 2019, which will reduce affordability for more buyers looking for property purchases.

Charlie Hoffman of HSBC Private Banking predicts a slowdown in 2023 due to a predicted base rate hike and its potential effect on buy-to-let activity, forcing landlords to raise rents in order to cover increased mortgage payments. Still, he remains confident that London property markets will remain strong due to investors’ appetite for prime properties in London.

3. The Rise of Multi-Bedroom Properties

As the Covid pandemic subsided and life returned to normal, many homebuyers decided to search for larger properties. This trend was fuelled by hybrid working arrangements where workers required quick, easy access both for work and leisure activities. Rightmove search data indicated that interest in apartments had grown more quickly than interest for terraced houses since 2022.

As much as the property market remains resilient, rising inflation and higher mortgage rates are beginning to impact it, making it increasingly difficult for people to gain entry onto the housing ladder. According to figures released by the Office for National Statistics (ONS), full-time employees in England needing 8.3 times their annual earnings in order to purchase a home, more than double what was seen during previous property booms.

As the race for space wanes and homebuyers become more value-minded, prices should start falling in coming years – creating an opportunity for first-time buyers who may otherwise struggle to enter the property ladder. But even at lower prices, securing a mortgage remains challenging.

Rent prices have also seen steady increases, though at a slower pace. Experts predict that monthly mortgage costs should remain high but remain sustainable and stabilize.

4. The Rise of City Centre Apartments

Global megatrends are having an unprecedented effect on the property market. From urbanisation and climate change, to ageing demographics and population ageing, these forces are changing housing demand both short- and long-term, driving people away from rural locations towards city centres – an estimated 80-90% of humanity expected to reside within urban settings by 2100.

Due to this trend, interest in urban regeneration and new build properties is increasing significantly. Areas that see investments in such schemes tend to experience an upsurge in demand from homebuyers and property investors with longer-term goals – and this trend is expected to continue through 2023.

Since the pandemic began, buyers have favored apartments and city centre properties over rural properties; however, this trend appears to be shifting with people returning to work. Rightmove reports that enquiries for city centre flats have seen an upsurge by 37% compared to one year ago.

Rents have seen significant increases across the UK. London saw rents jump 33.6% year-on-year – far exceeding the 8.3% national average increase. This may be partly explained by limited supply during pandemic outbreak, and as demand rises further prices will follow suit.

An additional factor driving rental growth is that more homeowners are opting for new-build properties over older houses due to their energy efficiency benefits. According to figures released by Office for National Statistics, new build apartments typically boast an EPC rating of B compared with C in older apartments due to modern building techniques and materials, improved insulation measures, and government initiatives encouraging energy efficient housing stock.

5. The Rise of New Build Properties

After years of steady expansion, the UK property market is beginning to see signs of slowing due to rising mortgage rates; as less people can afford homes. Experts anticipate this short-term setback will soon pass and all will return to normal.

Even in an otherwise slow property market, developers still see strong interest for new builds using modern construction methods such as prefabricated or modular buildings – both methods reduce construction costs while being environmentally-friendly solutions.

As costs continue to increase, buyers are seeking out energy efficient properties as a means to reducing bills. This has lead to an increased interest in homes with higher energy ratings such as those having an EPC rating of C or above.

As such, we expect a rise in new build properties coming onto the market by 2023 – an encouraging development as this should help alleviate housing shortages in the UK.

New build properties reflect how people work today – more people than ever preferring to work from home at least some of the time, leading to an increase in demand for larger properties with space for home offices.

In 2023, property market analysts expect it to slow down but not crash completely. Rising interest rates and diminishing affordability may temporarily impact demand; ultimately however, your decision on investing will depend on your own personal circumstances, investment goals, and risk tolerance.