Thinking of buying or selling a luxury home in 2023? With the UK now officially in a recession, many property investors are wondering whether now is a good or a bad time to make their move, but while mortgage prices are on the rise and causing low and mid-priced property buyers to think twice, those in search of high-end properties – and willing to part with the cash for the privilege – appears to be holding firm.
But before you go ahead and hire that man and van to help you move your belongings into a shiny new abode, there are some key trends to be aware of that are set to shape the UK luxury real estate market in 2023, and that could help you to make an informed decision about your next potential big move.
Luxury homes are selling quickly
The good news is that despite the current economic climate, luxury properties including penthouses and mansions are continuing to sell fast. The housing market has grown significantly over recent years, but luxury property sales have remained particularly strong. During the pandemic, we saw a dramatic increase in the number of high-end property owners packing up and moving away from big cities in search of sprawling abodes in the countryside, and while the mass exodus has slowed, the appetite for beautiful properties hasn’t.
It’s a seller’s market at present, with many luxury properties being snapped up three times as fast as they were just a year ago – and considering many high-end buyers and investors don’t require a mortgage, it’s a trend that will remain relatively unaffected by recent economic developments in 2023.
The luxury property market is hottest in the South West
Luxury properties remain in high demand across the UK, but nowhere as much as in the South West. The number of wealthy individuals and families snapping up lavish abodes in Devon and Cornwall surged in 2020 and 2021, and this year, the increased interest in the region has continued.
The coastal town of Brixham in Devon – located between the major cities of Plymouth and Exeter – is considered particularly hot property at present, with house prices a whopping 25 per cent higher now than they were just a year ago. The popularity of apartments and houses in this quaint and quiet fishing town shows that as a nation, we’re continuing to seek out a quieter and slower pace of life that allows us to stay better connected with nature – and with the stress of ongoing economic pressures set to continue well into the new year, the appeal of calming seaside destinations like this will only continue to rise.
London’s golden postcodes are regaining their appeal
Nevertheless, that doesn’t mean that London’s most affluent areas have remained out of favour, and over the past year, as life returned to normal following the end of Covid-19 related lockdowns, many have been either moving back permanently to the city, or splitting their time between urban and rural lifestyles.
Wealthy buyers in London tend to be cash-rich, with two thirds of properties snapped up in the capital’s most desirable areas – such as Kensington, Chelsea and Notting Hill – paid for outright. And with a growing number of foreign investors eager to find good deals with the pound having weakened against the dollar, interest has, in general, remained steady. Prices may not have yet recovered to the all-time highs that were seein 2014, but they are edging slowly upwards, making central London a popular spot for luxury real estate buyers across the board.
City rental prices are booming
For buy-to-let investors, the capital is also an attractive prospect at present, and this pattern is set to continue throughout the new year. The high-end rental market has seen a resurgence over the past year thanks to high demand and limited stock, plus the gradual return of tenants from other countries. According to Rightmove, average monthly rent prices in London have surged by 15.8 per cent in 2022 compared with 2021, and as workers continue to be called back into their offices to work rather than logging on remotely from their holiday homes, they’re having to pay more for the privilege of moving back into prime locations in the Big Smoke.
With this in mind, landlords can expect to make some healthy returns on their investments as we head into 2023.