Slow recovery in sales and further falls in prices

Housing market activity is likely to recover only gradually from its current lows, which means we think 2023 will be the weakest year for sales since 2012. Affordability will remain stretched by past standards, especially in the first half of the year. As a result, we think prices will fall by an additional 6% from their current levels, taking the peak-to-trough fall to around 8%. As affordability returns to more sustainable levels and looser monetary policy revives the economy, we expect house prices will stabilise towards the end of this year and return to growth in 2024. The brighter economic backdrop should also help sales to return to pre-pandemic levels by end-2024. We also think 2023 will be a tough year for the multifamily sector. We forecast a small fall in rents and a double-digit drop in capital values, before prospects begin to improve in 2024.