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    Is it a Good Idea to Buy Property in 2023?

    Due to the current mortgage rates, UK house price growth has slowed and even dropped in some regions. Current average mortgage rates for the UK sit at 5.73% for a five-year fixed mortgage. While high, this however means lower competition and lower prices for property investors.

    The current rate has seen a drop of 0.42% from the height of the Base Rate this summer. The overall annual house price growth is 0.1% to counteract inflation and the higher rates.

    The shock over current mortgage rates in the UK is due to the sudden rise over the summer. The property market was used to some of the lowest rates the country has had, with most FTBs even purchasing three-bedroom homes during this time.

    Between 1995 and 2022, the average mortgage interest rate was 5.62%. With current mortgage rates only slightly above this UK average, the rates we are now experiencing are the norm. It has, however, been due to the velocity of the increase that caught the market and buyers off-guard. This, plus the imbalance of the cost of living and income, still has people understandably concerned about buying a house in 2023.

    Suggestions for Buying a House in 2023

    Cash Buy a Property

    Cash buyers can purchase a property immediately. If an investor is used to using mortgages, the prospect of cash buying can appear daunting. But researching and weighing the pros and cons of cash buying is key. Such a way to invest can be seen as more secure, seeing as there are fewer risks to assets if financial circumstances change. Transactions are also far less likely to fall through due to cash buyers not relying on mortgage offers. Cash buying a property puts the investor in a far better position, especially during current UK mortgage rates.

    As interest rates rose to 6% last November, 48% of investors were cash buyers or using small LTV mortgages to secure their properties. Periods like this are good news for cash buyers. There is far less competition and sellers are more likely to accept cash buyers over those lending for a quicker sale. To guarantee that quick sale, too, cash buyers can often offer below the asking price of the property.

    Purchase a BMV Property

    A below-market value (BMV) property can have been on the market for a long time or is, more commonly, from motivated sellers who want a quick sale. These properties are below their market price, hence the name. BMVs can be useful for investors cash buying or wanting smaller investments to grow their property portfolios.

    With much lower purchase prices than their average seen on the market, BMV properties offer rental yields much higher than the national average. This can grow in popularity for those buying a house in 2023. Property sourcing for such opportunities can see prices £10k, £20k, or even £40k less than their market value. Even with the current mortgage rates in the UK, properties like these can present investors with fantastic returns.

    Off-Plan Investments

    While off-plan investments cannot be tenanted as immediately as resale or BMV properties, they do offer purchase prices up to 15% below market value. The earlier the development is in construction, the more investors can maximise their ROI. What is more, once the new-build property has been completed, investors receive instant equity due to the likelihood of it increasing in value during its construction.

    Off-plan property investments can offer the best rental yields. Due to their modern infrastructure and energy efficiency, meaning lower utility bills for residents, off-plan developments receive high demand and high rental income. With prices below market value and the ease of management, buying off-plan is a fantastic investment for the UK’s current mortgage rates.

    CityRise Verdict

    The UK’s current mortgage rates should not put investors off buying a house in 2023. While they are higher than the previous few years, this is to combat inflation, and they have already reached their peak.

    For those not wanting to invest in property with a mortgage, cash buying is a beneficial alternative. Buyers can avoid current mortgage rates by paying upfront. It is recommended to secure a smaller property, as well as invest in off-plan and below-market value opportunities. These are some of the best types of property investments. This is due to their lower-than-average purchase price and higher-rewarding returns, through rental income or instant equity.

    Investors should also look to investment hotspots and the best places for buy-to-let property. Using an agency rather than investing alone is recommended above all, especially with current mortgage rates in the UK. Agencies like CityRise can guide investors in the right direction and ensure each opportunity is highly profitable.

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