What Will Happen to the Wembley Property Market in 2023?
The autumn of 2022 saw economic and political instability with the resignation of Boris Johnson as Prime Minister and the ill-fated Liz Truss 44-day premiership. Now as we go into 2023, the economic and political turmoil has subdued, offering a greater feeling of stability in money markets.
So, on the back of that, what is the expectation for the British (and Wembley) housing market as we go into the new year?
The biggest issue is inflation. Low steady inflation of around 2% a year is good for the economy, yet the high levels we are experiencing now isn’t. It affects the spending power of the pound in your pocket, and it alters the way people spend their money (including buying and selling property).
So where has this inflation come from?
Many blame it on inflated gas prices because of the Ukraine issue (however, it is believed by most economists only around 4% of the current 10.7% inflation figure is because of the fuel crisis).
UK inflation was already running at 6.2% when the Russian tanks rolled into Ukraine in February 2022 which created that energy price shock. Therefore, where has the rest of the inflation come from?
The catalyst of inflation started in 2020 with the Bank of England’s Quantitative Easing (QE). This pumped £450m new money into the economy at a time when the future looked bleak. The problem was, people had nothing to spend that money on, so when things started to get going after the lockdowns, there was a mis-match of too much demand for goods (as people had that money) and a lack of goods and services (because there wasn’t enough supply of those goods and services with the supply chain issues).
This all meant prices went up (i.e., inflation). The catalyst of this inflation was the Bank of England printed too much money in 2020 with QE and the supply chain issues (all easy to say with hindsight!).
Too much inflation is bad for the economy and therefore, ultimately the property market.
Two things will reduce inflation.
One is a recession and the other is increased interest rates.