BRIP Remains Resilient

The housing market has proven remarkably resilient so far in 2023 driven by limited supply and strong wage growth.  It appears that many of the forecasts made about the market in the wake of the ‘mini-budget’ have proven to be too pessimistic and seem to have underestimated the impact of low supply coupled with a robust employment market.  Despite substantial Bank of England base rate increases aimed at reducing inflation to an acceptable level, average residential pricing levels have eased rather than fallen to the extent expected.

 Halifax and Nationwide were reporting average sales prices were down 2.7% and 3.8% respectively from the September 22 peak as at the end of June 23.  It should be noted that most of these falls came in the first four or five months following the ‘mini-budget’ and values stabilised in Q1 23 with falls of just 0.2% in the last 6 months.

 There has been a further increase in interest and mortgage rates in recent months and this is expected to weigh on demand throughout the rest of the year with most commentators expecting further price falls in the second half of 2023 before stabilising early next year.  It is also expected that transaction volumes will fall from an already subdued level leading to a stand-off between both limited buyers and sellers.

 Despite what happens in the wider market throughout the remainder of this year, our expectation is still that the pricing of high-quality new build homes in strong locations with wide appeal will remain robust and will outperform the wider market.  This has been our experience across our portfolio to date and we remain optimistic that sales prices will continue to meet or exceed our base case assumptions.