A slowdown in the UK’s housing market is likely, but many factors could affect the rate of decline. The most significant risk is the cost of living crisis, which strains household budgets. This means fewer people will be able to afford a home.
What Will Happen to House Prices in 2023 UK?
It may also put first-time buyers off buying a home. Despite the risks, the growth in average house prices over the past two years has been impressive. The cost of a typical home has risen by nearly PS50,000 since August 2020.
The house price cycle started in 2008 and is now in its third year. By 2024, UK house prices will have increased 77% on average – 110% in London alone. This is compared to a 256% increase in London during the previous cycle, from 1992 to 2007.
The rise in interest rates will likely slow down the uk property investment. The Bank of England has already raised rates, and there are still more rises. A cost of living crunch is on the horizon, further pushing interest rates.
The base rate is forecast to rise to 2.5pc in 2023, but many economists expect this to reach a higher level. Markets are already pricing in a rise to 3.75pc, so it’s possible that rates could reach as high as 3.75pc. If rates exceed 2.5pc, house prices are expected to fall.