NEWS: Will house prices drop in the UK in 2023? (2024)

FAQs

Is the UK house price crash coming 2023? ›

The average price of homes coming to the market has risen by 1.8%, or £6,647, from April, which is above the average increase for May. At the beginning of the year, research from Finanze suggested residential house prices could fall by 11% in 2023.

Main points. Average UK house prices increased by 4.1% in the 12 months to March 2023, down from 5.8% in February 2023. The average UK house price was £285,000 in March 2023, which is £11,000 higher than 12 months ago, but £8,000 below the recent peak in November 2022.

Analysts at Nomura predict UK house prices will drop 15 per cent by mid-2024, estate agency Savills (SVS) and UK banking group Lloyds (LLOY) forecast prices will slump 10 per cent in 2023, while Knight Frank, another agency, is predicting a 10 per cent fall over 2023 and 2024.

UK house prices are expected to continue to fall despite surveyors' expectations that the housing market will stabilise over the next 12 months, a study has shown.

While reduced interest rates may mean demand for houses could increase, this will also make monthly mortgage payments more affordable, which could mean 2023 is the perfect year for you to buy a house instead of waiting until 2024.

The rise in the cost of living is making goods and services more expensive compared with a year ago, which could make it difficult to keep up with your mortgage repayments. House prices are predicted to continue falling over the next two years, so anyone who buys a home now needs to be prepared to see the value drop.

If inflation rises by, on average, 5% per year for the next two years, we could then expect a 40% decline in nominal house prices from December 2022 (by comparison, the OBR estimates a 10% decline). This would be a fall from £265,200 to £160,000 by the end of 2024 (Chart 6).

Homebuyer.com data analysis indicates that, for first-time home buyers, June 2023 is a good time to buy a house relative to later in the year. This article provides an unbiased look at current mortgage rates, housing market conditions, and market sentiment.

People refinancing during 2023 and 2024 will also be stuck on higher rates for longer, even after the Bank of England eventually begins cutting interest rates, Mr Goodwin says. “Those two factors together mean that we are unlikely to see a big bounce back in the housing market,” Mr Goodwin adds.

Lloyds and Halifax expect house prices to fall 8% in 2023, while Nationwide and online estate agent Zoopla are predicting falls of 5%. But while the consensus is prices will fall this year, “it's a more nuanced picture”, says Myron Jobson, senior personal finance analyst at interactive investor.

What will happen to UK house prices? ›

The UK House Price Index

The latest data currently available relates to March 2023. It showed the average house price in the UK fell by -1.2% in March 2023, following a fall of -1.0% in February 2023. Year-on-year growth currently stands at 4.1%.

Each recessionary period in the UK, on average, can devalue a property by -9.22% in real terms, and this means about -£9,220 decline per £100,000 of real estate value. In nominal terms, the decline, in the worst-case, can be around -7%; this means a - £7,000 reduction in value per £100,000.

Capital Economics' central forecast is for house prices to fall by 12% by the end of 2023, but Andrew Wishart, senior economist at the consultancy, said in a worst-case scenario prices could plummet by up to 20%. “The initial drop in house prices has been sharper than in the financial crisis or the early 90s.

If you're considering selling your house or looking to upgrade, now may be the perfect time for a successful transaction. Prices are rising and estate agents Oliver Rayns have estimated that UK estate values will continue to increase until 2023, making now an ideal opportunity to capitalise on it.

In January, Halifax predicted prices to fall 8 per cent throughout 2023, while Capital Economics has forecasted a 12 per cent drop. According to others, these falls could spill into next year. The Office for Budget Responsibility expects house prices to tumble until September 2024.

In summary: buying requires a bigger upfront cost, but renting is more expensive in the long term. A good rule of thumb is that buying a property becomes better value after around 10 years, compared to renting an identical property. Whether it's cheaper to buy or rent depends on several factors.

Mortgage rates are likely to decrease slightly in 2023, although they're highly unlikely to return to the rock-bottom levels of 2020 and 2021. However, rate volatility may continue for some time.

How old do you have to be to get a mortgage? As we've mentioned, the average age to buy a house in the UK is 32-34 depending on your location but you can buy a house and get a mortgage at any age over 18 years old. The best age to buy a house is when you feel ready and are ready financially.

Spring (from February to June) is generally considered the best time to sell your house fast. Analysis by The Advisory, based on data from Rightmove, suggests that March is the best month to start selling a house.

Why is buying a house so stressful UK? ›

Complex legal processes undoubtedly add to the stress of buying a home. Whether you're chasing solicitors for important documents or sorting through lengthy paperwork, it's arguably the most time-consuming aspect of the homeownership journey.

This is largely debated within the construction industry as it is really dependant on the materials that are used, the quality of the workmanship and the maintenance that is required and followed through on. On average, the generally expected and acceptable lifespan of a home should last at least 60 years.

The UK as a whole

Our underlying forecasts suggest that property prices will rise 23% by 2020 and 97% by 2030. An averagely priced home costing £280,000 today, would therefore cost around £344,000 five years from now and over half a million in fifteen years' time.

The Office for Budget Responsibility (OBR) predicts a property price increase of 3.5% in 2027, while Statista forecasts an average house price growth of 1.7% between 2023 and 2027.

Although home prices are expected to improve in the second half of the year, the California median home price is projected to decrease by 5.6 percent to $776,600 in 2023, down from the median price of $822,300 recorded in 2022.

Buying a home during a recession can sometimes be a good idea — but only for people who are lucky enough to remain financially stable. If you're thinking about buying during an economic downturn, be sure to enlist the help of an experienced local real estate agent.

Despite what some may think, 2023 is still a good year to invest in real estate, thanks to advantages like long-term appreciation, steady rental income, and the opportunity to hedge against inflation. Mortgage rates are expected to decline, but the housing market is likely to remain competitive due to low supply.

The 2008 financial crash

The biggest fall in UK house prices in recent memory was brought about by the financial crash of 2007-2009, which occurred as a result of deregulation in the financial industry and mortgage brokers in particular.

The consequence of this growing demand compared to limited growth in supply, is that there is strong economic pressure on house prices. UK Housing market has often seen demand increase at a faster rate than supply, causing price to rise.

The most common delays are down to conveyancing issues. The common problems are hurdles with paperwork, a disagreement between a buyer and a seller or complications with the property itself. All you can do is make sure you have all the right documents signed and organised.

What causes house prices to fall UK? ›

A fall in the number of households would affect demand. This may occur due to fall in population or rise in the average size of a household. For a property investor, they will look closely at the yield on renting a property compared to other forms of investment.

The average house price in England was £310,000 in January 2023. The average house price in Northern Ireland increased by 10.2% over the year to Quarter 4 2022. Northern Ireland remains the cheapest country in the UK in which to purchase a property, with the average house price at £175,000.

The average British home now costs about nine times average earnings: one estimate I recently read reckoned that the last time UK houses were this expensive was in 1876.

The annual percentage change for average UK house prices was 6.3% in the 12 months to January 2023, compared with 9.3% in the 12 months to December 2022 and 10.2% in the 12 months to November 2022. The average UK house price was £290,000 in January 2023, which is £17,000 higher than 12 months ago.

Scottish House Price Performance: National

Although this remains a high level of annual house price growth, this is down from the 11.7% annual house price growth to Q2 2022.

In addition, during recessions, people with access to cash are in a better position to take advantage of investment opportunities that can significantly improve their finances long-term.

According to experts, we are heading toward a recession in the UK. While it is not expected to be as extreme as the global financial crisis in 2008, it will have a definite impact on the housing market.

Reasons to Sell a Home Before a Recession

Best Price – Home prices are typically at their highest during a time of economic expansion which is the opposite of a recession. If you want to get the highest price for your home, aim to sell the home at a time of economic exuberance.

As such, we are forecasting that prime prices will fall by an average of -7.0% by the end of 2023. Longer term, as the Bank base rate gradually falls and mortgage costs continue to improve, we expect values across outer prime London to rise by an average of 6.1% over the five-year period to 2027.

Fall and winter are the worst seasons to sell

Just like in the warmer months, the weather plays a factor in the winter months, too. As the days get dark earlier and temperatures drop, people tend to stay close to home. This means less foot traffic for sellers.

How long do most houses stay on the market UK? ›

The average time to sell a house, after being listed, is two to three months. It's important to note that this is the average time across the entire UK property market.

Predictions: 2025-2050

If average house prices continue to rise as they have been doing, by 2025, the average property will cost £251,476. This figure will then tip over the £300,000 mark in 2035, and increase to £392,301 by 2050 – a huge 64% increase in 30 years!

UK house prices are expected to fall by 10% from their previous peak in the fourth quarter of 2022, according to the Office of Budgetary Responsibility (OBR) forecast published on Wednesday as chancellor Jeremy Hunt unveiled his budget.

Sellers have lost some power compared to last year, but they continue to achieve closer to their asking prices than they did pre-Covid. The average home sold in England & Wales in April achieved 99 per cent of its asking price - this is down compared to April last year but ahead of the 98.1 per cent in April 2019.

The annual percentage change for average UK house prices was 6.3% in the 12 months to January 2023, compared with 9.3% in the 12 months to December 2022 and 10.2% in the 12 months to November 2022. The average UK house price was £290,000 in January 2023, which is £17,000 higher than 12 months ago.

According to the CoreLogic HPI Forecast, home prices are projected to continue their upward trajectory. The forecast indicates an expected month-over-month increase of 0.8% from March 2023 to April 2023 and a year-over-year increase of 4.6% from March 2023 to March 2024.

With mortgage rates declining faster than expected, home prices are likely to remain mostly flat throughout 2024. This will be good news for buyers who have been waiting on the sidelines for a good time to enter the market.

So far in 2023, the Fed raised rates 0.25 percentage points twice. If they hike rates at the May meeting, it is likely to be another 0.25% jump, meaning interest rates will have increased by 0.75% in 2023, up to 5.25%.

If mortgage rates stay at 4-5%, we expect to see annual UK house prices change between +2% and -2%, as long as the labour market remains strong. However, the latest inflation data is higher than expected, which suggests we may be at a tipping point for UK house prices.

As such, we are forecasting that prime prices will fall by an average of -7.0% by the end of 2023. Longer term, as the Bank base rate gradually falls and mortgage costs continue to improve, we expect values across outer prime London to rise by an average of 6.1% over the five-year period to 2027.

How much will house prices be in 2030 UK? ›

The UK as a whole

Our underlying forecasts suggest that property prices will rise 23% by 2020 and 97% by 2030. An averagely priced home costing £280,000 today, would therefore cost around £344,000 five years from now and over half a million in fifteen years' time.

The estate agent Savills has forecast that the average UK house price will fall by 10% this year, “with growth expected to resume in 2024 as affordability pressures gradually ease”.

It expects a 1% rise in house prices in 2024. Anthony Codling, chief executive of home buying and selling platform Twindig agrees with Savills' prediction: 'I do not think a house price crash is coming. In my view, at a national level, house prices will fall by 10% during 2023.

In my opinion, real estate is one intelligent option to consider in 2023, as it often has excellent returns, tax advantages and provides diversification even in the face of a challenging economic climate. Real estate also has the potential to compound your investment.

If you need to be occupying your home by a certain date to save on rent, it's a much better deal to close at the end of the previous month (for example, January 30) instead of the beginning of the current month (February 1).