UK House Prices could Drop by 8% in 2023

After seeing some of the largest gains on record in 2022, UK house prices could drop by as much as 8% in 2023.

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"We expect house prices will decrease"

It is reported that in 2023, UK house prices could drop by as much as 8%.

According to the Halifax UK Housing Market Review for 2023, the bank has said that while property prices have been “continuing to rise at pace” in 2022, the values are predicted to drop by up to 8% in 2023.

The predictions follow the Bank of England’s 0.5% hike to 3.5% in interest rates.

The most recent rate increases have put even more strain on households already experiencing hardship due to the rising cost of living as food, fuel and energy prices continue to climb.

However, amid a more difficult economic climate, it was said that the housing market will now “rebalance”.

It stated that this degree of reduction would bring prices back to about where they were in April 2021, which was £258,295.

However, because it did not yet have statistics for December 2022, Halifax has declined to assign a specific price point.

It stated that annual house price inflation fell sharply in November 2022 to just 4.7%, down from 8.2% in the 12 months leading up to October 2022.

This indicates that the average price of a property in Britain is £285,579, down from £292,406 in November 2022.

Halifax has said that from March 2020 and August 2022, the average price of a house increased by around £55,000.

A new record was set in August 2022 for the highest average price of a house, costing buyers £293,992.

Halifax’s Homes Director, Andrew Asaam shared his views on the housing market forecast for 2023. He said:

“This year kicked off with average house prices continuing to rise at pace, still supported by low-interest rates and strong demand from buyers.

“We saw some of the biggest house price increases the market has ever seen over the last few years.”

“Between March 2020 and August 2022, the average house price increased by nearly £55,000, an increase of 23 per cent, to £293,992, a new record high.

“As the increasing cost of living puts more pressure on household finances and rising interest rates impact customers’ monthly mortgage payments, there’s understandably now more caution among both buyers and sellers – particularly following recent market volatility – which has seen demand soften as people take stock.

“Looking ahead to next year, it will clearly be a more challenging economic environment and the housing market will continue to rebalance to reflect these new norms.

“We expect house prices will decrease by around 8 per cent next year.

“To put this into perspective, such a fall would place the average property price back at roughly the level it was in April 2021, reversing only some of the gains made during the pandemic.”

Ilsa is a digital marketeer and journalist. Her interests include politics, literature, religion and football. Her motto is “Give people their flowers whilst they’re still around to smell them.”