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House prices will fall in 2023 and 2024

Our new, higher, interest rate forecasts mean that we now expect house prices to fall marginally in 2023 and 2024. While there are risks on both sides, our base case is that prices drop by 5% overall, reversing a fifth of the surge in house prices since the pandemic began.
Andrew Wishart Senior Property Economist
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More from UK Housing

UK Housing Market Data Response

Nationwide House Prices (Jun.)

Monthly house price inflation slowed in June to its lowest since last September according to the Nationwide, while the annual rate continued to edge lower. That is consistent with our view of steady deceleration through the year, followed by single-digit annual price falls in both 2023 and 2024. Real Estate Drop-In (6th July, 2022): Join our US Commercial Property team for this 20-minute briefing on why we think this is the market top – and how far we expect returns to fall. Register now.

30 June 2022

UK Housing Market Update

Cost inflation to ease alongside new home volumes

After reaching a record-high in June, we think that inflation in builders’ costs will soon start to ease. But even as cost pressures subside, construction volumes will slump as the housing market slows.

28 June 2022

UK Housing Market Update

Withdrawal of affordability test is a wise move

We suspect that the main reason for the hasty withdrawal of the Financial Policy Committee’s mortgage affordability test is that it was on course to become a severe constraint on many buyers’ financial firepower. If left in place, it could have led to a far larger house price fall than the 5% drop we forecast.

20 June 2022

More from Andrew Wishart

UK Housing Market Chart Book

Pick up in London demand will be fleeting

Despite the permanent increase in working from home, the end of pandemic restrictions has triggered a resurgence in demand in London’s rental and house purchase markets. Annual inflation in the ONS House Price Index for London has already risen from 3.8% in January to 8.1% in February, and more timely indicators point to a further acceleration in the near term. Moreover, some central boroughs such as Camden and Westminster have reversed previous dips in house prices. However, with mortgage affordability more stretched in the capital than in other regions, we expect rising mortgage rates to cool house price inflation later in the year.

22 April 2022

UK Housing Market Update

Builders cautious despite strong demand

Despite facing very strong demand housebuilders appear reluctant to commit to new sites. This is because a shortage of materials is delaying completions, while rising interest rates and the end of the Help to Buy Equity Loan scheme mean demand is uncertain further ahead.

19 April 2022

UK Housing Market Data Response

Credit Conditions Survey (Q1 2022)

Banks expect mortgage availability to fall back in Q2 as lenders push up borrowing rates to reflect increases in Bank Rate, but other lending criteria are expected to be stable or loosen.

14 April 2022
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