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- 2023 -
As we step into the final month of the year, the streets of London are beautifully lit, ushering in the season of Christmas. Despite the increasingly harsh cold, many are looking forward to the holiday festivities and the year-end celebrations.
The year 2023 witnessed a persistent surge in prices, adding to the financial burden for households. How has everyone experienced this year?
In this year's last newsletter, we'll provide an overview of the price trends and the real estate market in the United Kingdom throughout 2023.
Price Trends and Inflation Rising prices since 2021 have significantly escalated household expenditures over the past two years. Currently, while the inflation rate has eased compared to before, prices for certain items like butter have decreased from a few months ago, others like sugar continue to soar. The previously escalating inflation rate has shown a gradual decrease (Retail Price Index: January 13.4%, April 11.4%, July 9%, October 6.1%) and is anticipated to continue declining. However, a return to a normal inflation rate is expected only by the end of 2025. *Normal inflation refers to an average annual increase of about 2% (a government-set target). To curb inflation, the Bank of England significantly raised interest rates from December 2021 to August 2023, aiding in controlling inflation, but the full effect will take time. As interest rate changes typically have the most impact on inflation around two years later, a challenging period is expected until 2025.
Real Estate Market in 2023 According to Rightmove, a major real estate advertising company, rents outside of London have once again reached record highs, with advertised rents marking a 15-quarter consecutive high. Rents have surged by approximately 10%, and the average rent in London has risen by about 12% from a year ago, far surpassing the inflation rate. Rightmove's Rental Trends Tracker indicates that each advertised property receives an average of 25 inquiries. Compared to pre-pandemic 2019, this is more than triple the average of 8 inquiries per property at that time, marking a 173% increase from the same period in 2019. Despite increasing demand, the number of rental properties available in the market has decreased by 46% from the 2019 level, exacerbating the imbalance between supply and demand and contributing significantly to the steep rise in rents. The current situation is expected to persist for some time, with rental prices in the real estate market forecasted to continue rising.
Given the ongoing challenging circumstances for tenants, it's advisable to act promptly upon finding a desirable property.