‘Unprecedented times’ is a phrase that has done a lot of heavy lifting recently. Changes that typically would have played out over a generation have been squeezed into just a handful of years.
Against this backdrop, Hamptons Research has put together the Top 10 Trends developers must consider going into 2023.
This blog explores just a few of these trends that shape the market next year and beyond. To read the full article, please click here.
A deepening Help to Buy shaped hole
For most housebuilders, the winding down of Help to Buy hasn’t been particularly painful. Some of the biggest builders in the country have transitioned from 30-40% of their sales being backed by the scheme to 10-15% fairly painlessly, all while selling more homes so far this year. But as interest rates have risen, would-be first-time buyers with smaller deposits have been hit harder than almost anyone else, those buyers for which Help to Buy was designed. Help to Buy will probably be missed more in 2023 than it was in 2022.
A new breed of international buyer
As Covid restrictions have been lifted across the globe, international buyers have returned to pre-Covid levels. The strengthening of the dollar, and the Middle Eastern currencies tied to it, offers many overseas buyers deep discounts. At the same time, nearly 150,000 people have taken up a BNO visa from Hong Kong during its first 18 months on offer, pushing a new breed of overseas buyer into heavily domestic mainstream markets outside Prime Central London, interested in houses rather than flats. These are buyers who have mostly only known new, and for the most part, were renting in Hong Kong.
Rising finance costs to tip to balance towards build to sell
Molior reports that in Q2 2022 that around 40% of all new home sales went into build to rent, a bigger driver than Help to Buy, overseas sales and flips to affordable housing combined. However despite strong rental growth, build to rent providers are not immune from cost pressures. Rising interest rates will push up the costs of delivering new build to rent schemes. This is likely to make new schemes in lower-yielding areas unviable, slowing down the shift towards single-family homes, while heightening the flight to quality. These higher rates are likely to shift the sums on development finance to potentially slow the growth in build to rent.
A deeper shade of green
As higher energy bills have landed on doormats, the importance of efficiency savings has risen up the agenda of most buyers as it becomes one of the primary considerations. As a result, it’s likely the bar will be steadily raised, pushed up by both buyer’s expectations and potentially also tougher EPC standards to come. Solar panels and heat pumps will increasingly be installed as standard as technology improves, coupled with strong buy-in from environmentally aware Millennials as well as investors who will likely require at least an EPC C rating.
Winds of change?
While a general election is due in 2024, there is potential for events to bring it forward. A lot can and will change before then, but polls currently suggest we are in for a new government, and with it potentially new housing policy. We got a glimpse of Labour’s plans at this year’s party conference. And in a pitch for the centre ground, most of it sounded suspiciously familiar: a new mortgage deposit scheme for first-time buyers, more stamp duty for overseas buyers and an explicit homeownership target of 70%. There is probably currently less difference in housing policy between the two main parties than there ever has been.
Continue reading Hamptons’ Top 10 New Homes Trends for 2023
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Hamptons offers New Homes services across its extensive 90-branch network. Comprising of a range of industry specialists, Hamptons’ Residential Development department partner with some of the country’s best property developers to deliver schemes of all shapes and sizes to market. Get in touch to discuss your 2023 plans with one of their experts.
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