UK housing market trends for 2023

Since the global pandemic, the UK’s housing market has mainly been dominated by rising house prices and the ‘race for space’. However, with the current cost-of-living crisis and many office-based workers looking to make hybrid working their ‘new normal’, what does this mean for trends across the residential housing market in 2023?

At enact conveyancing, we’ve looked at some of the biggest topics likely to transcend into the housing market this year.

Energy-efficient properties

A recent report by Zoopla states that six out of 10 estate agents say homes with high energy efficiency ratings are holding their value despite the overall market slowdown, according to the Royal Institution of Chartered Surveyors.

At the same time, 40% said they are seeing more interest from potential buyers in energy-efficient homes.

And 41% said sellers are attaching a price premium to their home if it has a high energy efficiency rating.

In the UK, energy-efficient properties are increasingly popular due to rising energy costs, concerns about climate change, and the government’s commitment to reducing carbon emissions.

The UK has set a target to achieve net-zero carbon emissions by 2050, which means that energy-efficient homes and buildings are a crucial component of achieving this goal. Some energy-efficient properties in the UK may include:

  • Passive Houses: These homes are designed to be ultra-low energy, with high levels of insulation, airtightness, and mechanical ventilation with heat recovery (MVHR) systems.
  • Zero-Carbon Homes: These properties generate as much energy as they consume, often by using renewable energy sources such as solar panels, wind turbines, or heat pumps.
  • Code for Sustainable Homes: This is a standard for sustainable homes in the UK that requires compliance with specific energy efficiency criteria, such as a minimum level of insulation, energy-efficient lighting, and high-efficiency boilers.
  • Energy-efficient retrofitting: Older homes can be retrofitted with energy-efficient upgrades, such as insulation, double glazing, and efficient heating systems, to reduce energy consumption and carbon emissions.

The government has previously offered financial incentives and support for homeowners and landlords to make energy-efficient upgrades to their properties, such as the Green Homes Grant, which has now closed to new applicants but those with vouchers can still benefit from the scheme and the Energy Company Obligation (ECO) scheme. Currently, the only active scheme available to homeowners is the Boiler Upgrade Scheme.

Flats versus Houses

In the early stages of the COVID-19 pandemic, there was a decline in the number of people buying flats in the UK due to several factors.

First and foremost, the pandemic created a lot of economic uncertainty, with many people losing their jobs or experiencing reduced income. This made it difficult for people to get mortgages or feel financially secure enough to make a big investment like buying a property.

Secondly, lockdown and homeworking caused many people to re-evaluate their living situations and priorities, with some people wanting more space and access to outdoor areas. Flats can be more restrictive in this sense, which led some people to look for houses instead.

Nearly three years on from the first national lockdown and the housing market has since rebounded, and there has been an increase in the number of people buying flats again.

According to Zoopla, the first few weeks of the year have revealed home buyers are becoming more value-conscious.

The hit to buying power, caused by higher mortgage rates, inflation and the cost-of-living squeeze is causing property-seekers to hunt for smaller homes.

Zoopla’s data reveals:

  • 27% of new buyers are looking for 1- and 2-bed flats, up from 22% a year ago
  • 49% of buyers in London are looking for 1- and 2-bed flats, up from 42% a year ago
  • Share of demand for 3-bed houses has fallen 5 percentage points to 39%

Since the ‘race for space’ bubble has well and truly burst, this could be another reason for the increase in people looking to buy flats.

Essentially, the reality several homeowners have had to come to terms with is that during the pandemic when the UK’s housing market reopened and the stamp duty holiday came into play, many buyers stretched their budget to move to a bigger property.

However, they now face the harsh reality of the fact they could see their monthly mortgage payments jump dramatically when they have to remortgage their property as interest rates have increased considerably since December 2021.

Furthermore, with more businesses asking workers to get back into their office it only adds additional financial strain on those commuting from rural locations.

House prices

At the time of writing this, the latest ONS statistics have revealed that the average UK house prices increased by 10.3% in the year to November 2022, down from 12.4% in October 2022.

The average UK house price was £295,000 in November 2022, which is £28,000 higher than this time last year but a slight decrease from last month’s record high of £296,000.

While house prices remain high it is expected that they will begin to fall as wider economic issues begin to affect buyers’ affordability as the Royal Institute of Chartered Surveyors (RICS) reports.

At a national level, the net balance reading for new buyer enquiries came in at -39% (down marginally on a figure of -38% beforehand), signalling an ongoing weakness in new buyer demand across the UK.

Alongside this, the number of fresh property listings coming onto the sales market also fell, with the latest net balance of -23% representing the weakest return for this indicator since September 2021.

Turning to house prices, a national net balance of -42% of respondents reported a decline in prices over the latest survey period. This represents a further weakening relative to the figure of -26% posted in the November survey and indicates the downward price trend gaining further traction.

Simon Rubinsohn, Chief Economist, commented:

“The latest RICS Residential Survey highlights the emerging challenges in the housing market as new buyers grapple with more costly finance terms and uncertainty over the outlook for the economy.

“This is reflected in forward looking RICS indicators around both prices and activity. However, some signs of an easing in inflation pressures more generally could provide a chink of light particularly for those looking to take their first step on the property ladder.”

One of the reasons why house prices have increased so much over the last few years is the lack of housing stock meeting buyer demand. Therefore, sellers have had the upper hand in being able to sell their property and many homes have sold at over-inflated prices due to the increased demand.

What is likely to happen now is that sellers will need to be smart about pricing their property at a realistic value now that people’s budgets are stretched by other economic factors to avoid being overlooked if it’s overpriced.

Government support

The next government budget is due on March 13th and after the last ‘mini budget’ under Liz Truss’ regime it is highly anticipated that Jeremy Hunt will approach any ongoing support with caution.

As we already know, the significant increase in mortgage repayments coupled with the cost-of-living crisis poses a real threat to those struggling to manage their monthly repayments. Could a scheme such as Jeremy Hunt’s ‘stretchy’ mortgages allow those struggling financially to temporarily increase their mortgage terms to then reduce their monthly repayments?

The government’s previous Help To Buy: Equity Loan scheme has also come to an end which leaves another gap in the market for something to support those that are lower wage earners / first-time buyers struggling to get onto the property ladder. Could the chancellor announce a new scheme targeting these buyers?


The key takeaway here is that, with the downturn in the UK economy, budgets are extremely tight and this is likely to impact the housing market in 2023. Buying properties that are kinder to the environment is going to be key to buyers looking to save money on their utility costs while fuel prices remain high.

Finally, the government has previously placed a lot of emphasis on the housing market to kick-start the economy, therefore, all eyes will be on the Spring budget to understand what support or initiatives the Chancellor announces to stimulate the housing market after it has performed so well over the last few years.

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