Property Experts Predict a 5% House Price Fall
House prices could fall by up to five per cent in the next two years, wiping out much of the recent gains in value, say, market analysts.
The experts at think-tank Capital Economics predict homes will drop by 4.8 per cent by the end of 2024.
Although many experts have forecast a modest three per cent rise in house prices, this isn't a reworking of previous forecasts by the think tank. The analysts claimed prices would rise by up to nine per cent, but rising inflation and increasing mortgage rates have forced a rethink.
The consultancy says a price adjustment is more likely than fears of the housing market crashing by up to 20 per cent, as seen in the financial crash of 2008 or the 1990s.
The Capital Economics report said: "While the house price-to-earnings ratio is roughly the same now as in 2007, we do not anticipate a return to pre-financial crisis mortgage rates of 6%, so the cost of mortgage repayments will remain much less of a burden."
Drag on the market
The latest data confirms house prices are not going up as expected.
Nationwide had reported the fastest house price gains in 18 years, but annual growth dropped from 14.3 per cent in March 2022 to 12.1 per cent in April. The monthly increase was 0.3 per cent, well below a predicted 0.8 per cent returned by a Reuters poll of economists.
"We continue to expect the housing market to slow in the quarters ahead," said Nationwide chief economist Robert Gardner.
"Moreover, assuming that labour market conditions remain strong, the Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates," he added.
Here's a round-up of what lenders and estate agents are saying about house prices:
- Current UK house price growth is 8.3 per cent
- The price of an average home has increased by £29,000 to around £250,000 since the start of the pandemic in March 2020
- The fastest house price growth is in Wales - running at 12.1 per cent
- House prices have increased by 11 per cent in the past year
- The average UK home is worth £282,753
- House prices have risen £43,577 since the first lockdown two years ago.
- Homes have gained 12.1 per cent in value during the past 12 months
- The average home is priced at £267,620
- 38 per cent of people are thinking about moving home, according to a poll
- House prices are up 8.4 per cent in the year to March
- The average home is priced at £370,052
- House prices increased in 106 of 110 unitary and county councils during March.
Office for National Statistics
- House prices were up 10.9 per cent in the year to the end of February
- Average house prices hit £277,000 - £27,000 up on the previous year
- London house prices are growing the slowest - at 8.1 per cent
House prices by region - March 2022
House prices are rising the most in the South-West, with an average 12.5 per cent increase across the year.
London house prices grew the least - but homes in the capital remain the most expensive.
House Price Digest FAQ
The figures for average house prices and movements in property values can be confusing if you don't know how to read the data.
Here are some of the most asked questions about house price indices.
Why are the average property prices different in each report?
The reports use different data to draw conclusions and take the data from different periods.
Nationwide and Halifax base their indices on customer data, which are much smaller samples than the national data analysed by the ONS.
Acadata's methodology includes analysis that no other index uses.
Each organisation collects data over different periods, making a direct comparison difficult.
What is the average house price?
There's no such thing as an average home; the figure is simply math calculated from the total value of all transactions in the sample divided by the number of homes changing hands.
Which house price index is the best?
All have flaws because of the restricted data, but the one with the broadest sample comes from the ONS. Unfortunately, the ONS data is usually the last to market and out of date by two to three months on publication.
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