Estate agents operating in Tayside and Fife have given their predictions of whether property prices will rise or fall in 2023.
There has been a strong run of house price growth in Tayside and Fife since 2020.
However, the tide seemed to turn towards the end of last year as higher mortgage costs, the cost of living crisis and an uncertain economic outlook had an impact.
Savills has predicted a 10% fall in 2023 while Lloyds estimates an 8.8% reduction in prices.
However, the property market can vary from area to area.
A recent report from Bank of Scotland put Kirkcaldy’s house price growth at 29% in 2022 compared to 6.4% in Dundee and 9.8% in Perth.
We asked local property experts working in Tayside and Fife for their predictions.
Lindsay Darroch – Gilson Gray
Prediction: Prices up 1%
“The Tayside property market tends to be self-regulating. When there is lessening demand, supply also tends to drop. This in general means we don’t see sudden and sharp falls in prices.
“The cost of energy crisis, inflation, rising interest rates, the war in Ukraine and general economic uncertainty provides the backdrop to the housing market.
“I think 2023 will be a year of two halves for the property market.
“The year will continue where the last few months of 2022 left off with fewer purchasers but also significantly fewer properties.
“In the second quarter, more properties will come onto the market.
“In the second half of the year, as inflation starts dropping, interest rates start falling and a more positive economic backdrop we will start seeing numbers and prices starting to rise.
“I think we will see more developments coming online and this will be the oil that allows the property market to start moving properly again.
“Over the 12 month period I expect prices perhaps finishing the same or with a very small increase of 1%.”
Gary Robertson – Possible
Prediction: Prices down 5% to 6%
“It is widely expected that average house prices will fall, I would estimate around 5 to 6% lower.
“But it’s important to remember where these prices are falling from.
“The last two years in the property have been anything but normal and certainly the sharpest rise in prices and activity levels I can recall during my 17 years covering the Perthshire area.
“Some of the figures offered on some of our own properties left me scratching my head a bit. It was unsustainable.
“It was always expected to calm down back to a normal level and, in turn, bring prices back down to a normal level too.
“Some properties may take longer to sell and the frenzy might be over.
“But if a property is well presented, correctly priced and correctly marketed it stands a very good chance of getting a good result.”
Yvonne O’Connor – Thorntons
Prediction: Prices flat
“The property market has changed significantly this year. The mini budget, interest rate rises and the cost of living increases are now beginning to have an effect on the market with a cooling down over the last three months of 2022.
“Although prices are now under pressure, the lack of properties currently on the market is helping maintain current price levels with recent properties selling for home report value or just above.
“There is still strong buyer interest out there and this will help maintain prices.
“I expect more properties to come to the market in 2023 but due to market conditions I do not expect any increase in prices.”
Jim Parker – Fife Properties
Prediction: Prices down 5% to 10%
“When we look at property prices for next year, we have to take into account a recession and an increase in interest rates.
“It’s these two factors that will place negative pressure on house prices.
“Several economic commentators are preaching doom and gloom for 2023, yet we are not in the same position as the credit crunch of 2008 and 2009.
“The property market crashed then because banks and building societies stopped lending money.
“Fife house prices have increased by 31.3% since the pandemic started in March 2020 so there is a huge amount of equity built up in people’s homes to weather any decrease in property prices.
“The issue of negative equity will be highly unlikely and therefore the liquidity of the banks will still allow them to lend.
“I would predict that we will see a reduction between 5% and 10%, which will effectively put us back at March 2022 prices.”
Chris Todd – RSB Lindsays
Prediction: Prices up 3% to 5%
“A key feature of the Tayside market is that demand generally outstrips supply. I would expect that demand to continue during the next year, picking up in the spring.
“We do not, however, expect to see some of the excesses of the market that we’ve experienced in recent years.
“Offers significantly over the home report valuation will certainly become less common. We’re anticipating a relatively settled market.
“That, of course, is not necessarily a bad thing, as most sellers are also buyers.
“What we might find in 2023 is that more people locally stand a greater chance of buying the home they want at a more affordable price.
“Although they may be paying a higher rate of interest for mortgages, the flipside is they may end up paying less for the property they are purchasing.
“My advice to anyone holding off getting into the market as they wait to see what interest rates do is that there’s little point in waiting too long.
“I don’t foresee interest rates going down or up significantly any time soon.
“I expect prices to remain fairly stable – perhaps an increase of between 3% and 5%.”
Ken Thomson – TSPC board member
Prediction: Prices flat
“As we move into 2023 there has been no obvious pattern of property values falling locally, as a consequence of recent volatility in the financial markets.
“Demand still exceeds supply and an ongoing shortage of properties for sale is likely to mean that values and prices will be maintained close to current levels in 2023.
“The caveat to that is that significantly increased mortgage costs, combined with the general rise in the cost of living is likely to mean that in the majority of cases, premiums that buyers are prepared to pay over Home Report valuation will be smaller.
“Concern has been expressed at the number of transactions where offers have been withdrawn and that have fallen through.
“It’s reasonable to attribute the rise in the number of such transactions to the sudden and significant rise in mortgage costs, and in inflation that we saw in October and November.
“Once buyers have adjusted to the changes that have occurred, have done their sums and worked out what is affordable and what is not, we would expect the market to settle again.
“Sellers should not be afraid to bring their properties to the market for fear of a lack of buyers being interested, as indicators are that demand remains high.
“Sellers will, however, need to be realistic about values and the expected outcome on price given the increased costs buyers will be working with.”
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