Is now a good time to buy a house? 2023 guide for landlords

Buying a property can be a good long term investment. But it’s important to remember that the property market moves in cycles so there are better and worse times to buy.

If you’re thinking of buying a rental property, is now a good time to do so? Read on to find out the best time to buy a house and whether buy-to-let is still a good investment in 2023.

Is now a good time to buy a house in the UK?

Turbulent economic conditions over the last year have affected the property market. After years of low mortgage rates and high house price growth, mortgage costs have increased rapidly as average house prices have started to fall.

Recent figures from Nationwide show that average UK house prices dropped 3.8 per cent between July 2022 and July 2023. The average property price was £260,828 in July, 4.5 per cent lower than the peak reached in August 2022.

The average fixed rate buy-to-let mortgage has also risen sharply. Moneyfacts figures show that the average interest rate for a buy-to-let mortgage was 4.3 per cent in July 2022. Average rates peaked at 6.76 per cent in November last year and currently sit at around 6.5 per cent.

These conditions have led to:

• a slower property market, with less competition for properties
• affordability issues for buyers, forcing sellers to reduce asking prices

But what does this mean for landlords looking to expand their portfolios? It could in fact be a good time to buy a property for a reduced price as the market stalls.

By targeting areas with a thriving rental market, you can boost your return on investment even if house price growth continues to fall this year.

However, you’ll need to consider the impact of high interest rates on buy-to-let mortgages.

Your monthly repayments are likely to be higher so you need to make sure you could afford them.

And with house price growth stunted, short and medium term capital appreciation prospects aren’t as good as they were a few years ago.

This article is intended as a guide. Always speak to a mortgage professional or property expert if you’re not sure of anything.

Is now a good time to buy a house in London?

London is known for having high property prices and a resilient market that can withstand uncertain economic conditions.

Despite this, prices have also been falling in the capital. According to Halifax, the average property price in London was down 2.6 per cent year-on-year in July 2023, the sharpest annual decline in over a decade.

With prices falling in London, now could be a good time to buy. When the market stabilises and price growth returns, it’s likely that London will be one of the first areas to recover.

On top of this, the rental market in London shows no signs of slowing down with average asking rents in London reaching a new record in July 2023, according to Rightmove.

Read our guide on average rent prices in London for more information.

Is now a good time to sell a house?

With demand for homes falling due to affordability issues, we’re currently in what is known as a “buyers’ market”. This means conditions favour buyers. With less competition for properties, there’s likely to be fewer bidding wars and sellers will be more willing to negotiate on asking prices.

With this in mind, now may not be the best time to sell a property. However, if you’ve owned a buy-to-let property for a significant period of time, it’s likely you’ll make a healthy return on your investment even in a buyers’ market.

Buying a house in the UK – when is the best time?

The best times of year for buying and selling properties tend to be:

• January to spring – the start of a new year is a popular time for fresh beginnings
• early summer – better weather means people are keen to get out and view more properties
• autumn – following the summer holidays, buyers and sellers will be keen to get their business done ahead of Christmas

It’s widely considered that mid-summer (particularly during August) is a bad time to buy or sell as a lot of people go on holiday. On top of this, November and December are also unpopular months as people tend to put off plans before Christmas before re-entering the market in the new year.

As a landlord, you’ll need to consider the type of tenants you’re looking to rent to. For example, if you’re looking for a student property you need to buy it in time to get it ready for the next academic year to make the most of your investment.

Buying during one of the quieter times of the year could be a good strategy if you want to find a cheaper property with less competition. However, there’s likely to be less stock available and things might take longer to progress.

Where is the cheapest place to buy a house in the UK?

If you’re thinking about buying a property, it’s worth considering which areas have the cheapest homes and whether they’re suitable to rent out.

The table below shows the 10 cheapest postcodes in the UK, according to RentRound analysis of Propertydata figures.

Before buying in one of these areas, it’s worth researching the local rental market. The combination of a low sale price plus solid rental prices means you could generate a favourable yield.

Read our article on the best buy-to-let areas for more inspiration.

Is property still a good investment in 2023?

Despite falling house prices, property remains a good investment. This is particularly the case for landlords who are looking to hold on to their properties for the long term.

The combination of monthly rental income and capital gains over time (with house prices expected to recover in the next few years), landlords can benefit from a healthy return on investment.

Compared to other types of investment, such as stocks and shares, property is seen as one of the most reliable. This is because average values tend to rise over time, while people will always need homes to live in so demand is likely to remain steady.

Is it worth being a landlord in 2023?

From upcoming rental reforms to rising costs and changing energy efficiency rules, there’s no denying that there are plenty of challenges for landlords at the moment.

Tax changes in recent years mean that renting out a property is less profitable for many landlords. However, as explained above, owning property for the long term remains one of the most reliable forms of investment.

Despite challenging conditions, rental demand continues to outpace supply. This means that landlords are unlikely to have long void periods (times when their property is empty) while rental prices keep growing.

Rightmove data shows that in July 2023 the average asking rent for a typical home outside of London was 33 per cent higher than at the same time pre-pandemic in 2019.

In the same month, the current average time to find a tenant for a rental property was just 17 days, the shortest amount of time since November 2022.

So despite a changing market, landlords who manage to find good tenants and keep them for the long term will probably continue to see buy-to-let as a worthwhile investment.

Are you planning to buy a rental property this year? Let us know in the comments below.

More guides for buy-to-let landlords

• How to get a buy-to-let mortgage: a simple guide
• Rental reforms published – what do landlords need to know?
• Help with rent arrears – a guide for landlords
• Do landlords need contents insurance?