The past year has witnessed the fastest decline in UK house prices since 2009, leaving homeowners and prospective buyers concerned about the future trajectory of the housing market. With mortgage rates reaching levels not seen in a decade, experts have identified this as a major driver behind the £14,600 decline in the average property value. To understand where house prices are likely headed, the Daily Mail spoke to seven industry insiders. Their insights provide a glimpse into the potential extent of the future decline and the factors that will influence the market.
Predictions
- Craig Fish, Director at Lodestone Mortgages and Protection:
Fish predicts that house prices will continue to drop in the coming months. He anticipates that even when property prices begin to stabilize, historic data may still indicate further declines. He foresees drops of 15-20% from peak to trough, with data suggesting a possible decrease in the base rate and property prices stagnating before recovering towards the end of 2024. - Riz Malik, Founder and Director at R3 Mortgages:
Malik expects a potential fall of up to 10% in house prices this year. He believes that market support through provisions in the Mortgage Charter will last until June 2024. Malik suggests that without government support or a drop in interest rates followed by economic recovery, prices are unlikely to rise. - Graham Cox, Founder at Self-Employed Mortgage Hub:
Cox believes that with mortgage rates likely to remain above 5% for the next six to 12 months, a peak-to-trough fall of over 20% in house prices is possible. Adjusted for inflation, the decline could reach 30%, with the market bottoming out around 2025. - Denni Tyson, Mortgage Broker at Henchurch Lane Financial Services:
Tyson asserts that house prices will fall due to banks maintaining firm interest rates, leading homeowners and potential buyers to exercise caution. He suggests a possible 20% decline in house prices due to the significant rise in interest rates since December 2021. Tyson further argues that if interest rates remain above 4.5%, house prices may stagnate without any significant increases. - Ross McMillan, Owner and Mortgage Advisor at Blue Fish Mortgage Solutions:
McMillan notes that many experts had initially predicted a 10% decline in house prices nationwide by year-end, and recent data supports this projection. He acknowledges regional variation, with Scotland showing relative resilience compared to other areas. McMillan expects a flat market in terms of prices for the majority of next year, as rates gradually reduce and inflationary pressures recede. However, he suggests that housing stock shortages, coupled with diminished buyer demand, could lead to swift price increases following the General Election in 2024. - Jeremy Leaf, North London Estate Agent and Former RICS Residential Chairman:
Leaf points out that predicting house prices is challenging, as markets can change rapidly based on supply and demand dynamics. He argues that the current market is maintaining a consistent performance despite ongoing fluctuations. While further price decreases may occur due to interest and mortgage rate hikes, Leaf does not anticipate a crash in house prices. He attributes this to cash buyers dominating the market, the scarcity of housing stock, and serious buyers primarily driving transactions. - Stephen Perkins, Managing Director at Yellow Brick Mortgages:
Perkins expresses concern about the steep decline in house prices presented in recent data, attributing it to the repeated rate hikes by the Bank of England over the past year. He likens the state of the property market to a beaten boxer nearing the breaking point. Expecting demand to continue falling with another planned rate increase, Perkins predicts a protracted decline in house prices, with the market potentially reaching its low point after the usual autumn uplift, around November or December.
Conclusion
While experts paint varying pictures of the future of UK house prices, there is a consensus that further declines are likely. Potential decreases of 10-30% from peak to trough have been mentioned, with recovery expected to begin in late 2024 or beyond. Factors such as interest rates, government support, inflation, and the General Election in 2024 will likely shape the housing market’s trajectory. Homeowners and prospective buyers should keep a close eye on these variables as they assess their options in the market.