Cushman-Wakefield-Q4-2022-BTR-Report

FEWER FIRST TIME BUYERS IN 2023

A SLOWER HOUSING MARKET

RENT VS MORTGAGE MONTHLY PAYMENTS NATIONAL HISTORIC ESTIMATES

A slowdown in the housing market is expected in 2023 as a weaker economy , rising interest rates and high in f ation impact buyers ’ con f dence . Market indicators are already showing a slowdown in activity . Buyer demand in December 2022 was down 50% on last year ( Zoopla ), mortgage approvals fell 20% between October and November 2022, with the lowest number of approvals since June 2020 ( Bank of England ), and house prices are falling . According to both the Nationwide and Halifax house price indices , prices have experienced monthly declines for four consecutive months . We expect buyers ’ con f dence to remain subdued throughout 2023, with a continued slowdown in housing market activity anticipated . Historically , on a monthly basis , it has been cheaper to be a homeowner than a renter . However , towards the end of 2022, we saw this reverse , and on average , the monthly payments for new mortgages are now more expensive than monthly rent . Mortgage rates vary according to the size of the deposit , the length of the f xed period , and the length of the term . Assuming an average mortgage interest rate on 75% and 90% LTVs , on a new 5- year f xed mortgage , with a term of 25 years , typical interest rates have increased from 2.1% in February 2020 to 5.2% in December 2022. This has increased average monthly mortgage payments on a typical f rst - time buyer property from £733 in February 2020 to £1,297 in December 2022. RENTING VS MORTGAGE

£2,000

£1,800

£1,600

£1,400

£1,200

£1,000

£800

£600

£400

£200

0

Jun -11

Dec -11

Dec -17

Jun -17

Jun -12

Dec -12

Jun -15

Dec -15

Jun -13

Dec -13

Jun -21

Dec -21

Jun -18

Dec -18

Jun -19

Dec -19

Jun -16

Dec -16

Dec -14

Jun -14

Jun -10

Dec -10

Jun -22

Dec -22

Jun -07

Dec -07

Dec -20

Jun -20

Jun -08

Dec -08

Jun -06

Jun -09

Dec -06

Dec -09

75% LTV Mortgage

90% LTV Mortgage Rent

Note: mortgage monthly payments based on average price of all properties

£1,297 pcm Average monthly mortgage payment in the UK £1,174 pcm Average achieved rent in the UK

Given that the average achieved rent in the UK is now £1,174 per month , typical mortgage payments are now more expensive than rent .

Source: Cushman & Wakefield, Bank of England, UK HPI, ONS, Homelet Rental Index

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