November 9, 2023 10:06 am

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Nikka Sulton

A collective analysis by experts, including academics, economists, and mortgage professionals, foresees a notable shift in the housing market, with potential repercussions for homeowners. Finder, a reputable financial website, orchestrated a comprehensive discussion to glean insights into the future trajectory of house prices. The consensus among these experts, encompassing almost three-quarters of the panel, suggests a substantial decline in the range of five to 10 percent in house prices, specifically by Autumn 2024.

This collaborative forecast brings attention to the multifaceted factors influencing the housing landscape, from economic indicators to the anticipated impact of base rate fluctuations. As experts examine the intricacies of the market, homeowners and potential buyers are encouraged to navigate this evolving scenario with a keen understanding of the potential challenges and opportunities that may arise. Staying informed about these predictions allows individuals to make strategic decisions in the dynamic and fluctuating realm of real estate.

Charles Read, an economics fellow at the University of Cambridge, anticipates a moderate decline in house prices ranging from five to 7.5 percent. He attributes this expected dip to the recent surge in interest rates, impacting the affordability of mortgages and putting downward pressure on property prices.

In a more pessimistic outlook, David McMillan, a finance professor at the University of Stirling, foresees a steeper reduction of 7.5 to 10 percent. McMillan points to the upcoming year bringing various economic challenges that could squeeze household incomes, contributing not only to price declines but also potentially reducing overall transaction volumes.

Adding to the discussion, David Hollingworth, associate director at L&C Mortgages, aligns with the expectation of a decrease in house prices. However, he offers a nuanced perspective, suggesting that the improvement in rate outlook and the stabilization of mortgage rates might boost buyer confidence, leading to a potentially softer landing for the property market.

The experts express confidence in the absence of an impending housing market crash, with 73 percent foreseeing the UK steering clear of such a scenario.

Luciano Rispoli, a senior lecturer in economics at the University of Surrey, provided insight, stating, “Despite higher interest rates, housing demand remains robust, and the structural shortage of supply persists.”

Kate Steere, Deputy Editor at Finder, added a perspective on the current state of the UK housing market, describing it as a phase of adjustment. Steere highlighted that prices have experienced a decline and are expected to continue doing so from their previous peaks. However, she emphasized the enduring dynamics of supply shortage and strong demand, which act as stabilizing factors preventing a spiral downward in house prices.

Sam Miley, Managing Economist and Forecasting Lead at CEBR, stands as the sole voice predicting an imminent housing market crash. He attributes this anticipation to elevated borrowing rates and a resultant decline in demand. Miley explains, “Interest rates are projected to stay higher than their pre-crisis levels well into the mid-2020s. This increases the cost of borrowing, exerting downward pressure on buyer demand. It also elevates debt servicing costs for those on flexible tariffs, potentially prompting forced selling and an expansion in supply.”

In contrast, ten out of eleven experts foresee the base rate holding steady at 5.25 percent until the year’s end, with a solitary expert predicting a decrease to 5.0 percent come December.

Paul Dales, Chief UK Economist at Capital Economics, anticipates a stable base rate in the short term and offers insights into the long-term perspective. According to Dales, the Bank’s inclination is to maintain rates at their current peak, with a forecast suggesting they might persist until late 2024. Luciano Rispoli echoes this sentiment, suggesting the Bank will wait for additional inflation data before considering policy changes, implying a prolonged period of interest rates remaining unchanged.

In contrast, Alan Shipman, Senior Lecturer in Economics at the Open University, stands alone in predicting a rate reduction by the year’s end. Citing factors like falling inflation, sluggish fourth-quarter GDP growth, and indications of private-sector debt challenges, Shipman believes these elements will prompt the Monetary Policy Committee to initiate rate cuts.


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