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The UK repossession and property market has seen significant changes in recent years. 2021 saw strong growth as the economy began to recover from the COVID-19 pandemic where, in contrast, 2022 had its struggles.
Last year saw base rates increase from 0.25% to 3.5% from January – December whilst inflation rates continue to rise, peaking at 11.1% in October 2022, a 41-year high, before easing to 10.7% in November 2022.
We also saw the housing market end the year on a downbeat as prices fell for the fourth consecutive month in December, marking the longest run of declines since the 2008 financial crisis which could be an indicator for a rise in property repossessions in 2023.
The price of an average UK home fell by 0.1%, or just over £1,700, to £262,068 between November and December, according to the UK’s largest mortgage lender Nationwide Building Society.
The annual pace of growth also slowed sharply, from 4.4% to 2.8% – the lowest since July 2020, when it was 1.5%.
Looking ahead to 2023, experts are predicting varying forecasts on UK house prices. The buying frenzy we saw post-pandemic has given way to more caution from buyers. Due to this, Credit Suisse expects a 10% decline in house prices in 2023, Halifax an 8% decline whilst other City economists also predict large falls.
UK Finance has today published its mortgage market forecast for 2023 – 2024, anticipating a softening in the mortgage market next year that marks a return to pre-pandemic norms. Overall mortgage lending is expected to fall 15%, a return to pre-pandemic levels.
Due to the cost-of-living crisis, according to RICS, many homeowners will struggle over the next year to make mortgage payments, increasing the rate of repossessions.
We will continue to see people trying to find affordable housing with affordable mortgages and an increase in the number of people looking for rent-to-live properties. Landlords should see an intake of potential tenants and an increase in yields as people choose to rent over owning
Mortgage repossessions by region (2007 Q1 – 2022 Q3) Source: gov.uk
A small rise in unemployment, coupled with cost-of-living pressures and interest rate increases, will put further pressure on some households. UK Finance expects this pressure will begin to show in rising mortgage arrears from early 2023, increasing through the year and into 2024.
It anticipates the number of households in arrears to reach 98,500 next year, representing around 1% of outstanding mortgages. By historic standards these increases arrears figures do remain low but, as mentioned above, this should contribute to an increase in repossessions.
Whilst the UK saw the number of property transactions decrease by 21% in 2023 (from 1.2 million to 1 million), actions have been put into place to counter this such as last year’s announcement that the “generation buy” mortgage scheme being extended until the end of 2023. This has helped over 24,000 households so far and encourages lenders to offer these deals in uncertain times as they can buy a guarantee on the portion of the mortgage between 80% and 95%. If a borrower gets into financial difficulty and their property is repossessed, the government will then cover that chunk of the lender’s losses.
Experts are predicting that repossession numbers are expected to continue to rise modestly, as they did in 2022. However, numbers remain relatively low vs pre COVID-19. The latest UK repossession figures are scheduled to be updated on 9th February 2023 to include data up to the period of October to December 2022. Once released, Repossessedhousesforsale.com will be providing an updated report with further insight into the market for 2023.
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