The rise in mortgage rates from a low of 1.5% last November to 1.8% in April is beginning to weigh on home purchase demand, with the new buyer enquiries balance of the RICS survey dropping into negative territory in May. Supply is also improving according to the survey, redressing the imbalance between strong demand and limited supply that has pushed up prices over the last two years. Indeed, the survey is now consistent with house price growth grinding to a halt by the end of the year. And given we expect mortgage rates to continue to increase to over 3.5% by mid-2023 as lenders rebuild their margins, we remain content with our view that house prices will fall by 3% next year.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services