Originally published May 2023.

H2 2023

At the time of writing (March 20th 2023) the news is dominated by the recent collapse or rescue of a number of banks. It remains to be seen how this story will develop. However, initial signs are that regulators and the banking industry have moved quickly to stabilise the situation, providing some reason for optimism that we are not facing anything as bad as the 2008-09 financial crisis.

Nevertheless, for the property sector the timing is unfortunate. Most real estate markets are several months into a price correction that – in the U.K. at least – has developed far quicker than had been anticipated. The speed of the re-pricing had prompted discussion on whether a turning point could be reached by as soon as spring or early summer of this year. Undoubtedly, the timeline for the correction and the arrival point of a future recovery has moved back by several months.

However, assuming that the banking sector is seeing a brief storm and not something bigger, we feel recent economic data suggests property markets could still see a recovery in H2 2023; and perhaps by late summer.

Recent weeks have seen a shift in the mood among economic commentators on prospects for 2023. In November 2022, the consensus forecast for German GDP growth this year was -0.9%; yet by March 2023 this had been revised to 0.0%, according to Consensus Economics. Over the same period, the US has seen an upwards revision, from 0.2% GDP growth in 2023 to 1.0%, while the Eurozone forecast has risen from -0.1% to 0.6% and the UK from -0.9% to -0.5%.