UK house prices: Expert predictions

While some were expecting a house price crash in the next year, experts now believe this is unlikely, although house prices are still expected to go down. We look at what is happening with UK house prices and how this will impact mortgages, including expert predictions for the future.

House price predictions: Quick overview

• Almost three-quarters of experts (73%) believe house prices will fall between 5% and 10% in the next year.
• The majority of an expert panel (73%) agree that a housing market crash is not on the horizon.
• House prices fell by 0.1% in the year leading up to September 2023.
• Nationwide and Halifax house price indices recorded a 3.3% and 3.2% drop in house prices, respectively, in the year to October 2023.
• The average house price in the UK stands at £291,000 as of September 2023.
• Mortgage approvals were down 35% year on year in September 2023.

Are UK house prices going down?

The latest data from the ONS UK house price index shows that the average house price in September 2023 was £291,000, a fall of 0.1% from September 2022. The growth in house prices has been slowing after peaking at 13.8% year-on-year growth in July 2022, and now house prices are falling year-on-year.

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• UK house prices

The annual growth in house prices has been slowing over the past year, according to the ONS index, which is considered the most reliable, and there was a fall in the average house price in September 2023. This suggests that house prices may continue to decrease over the next year or so.

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• UK house price growth

According to the Nationwide house price index, there was a 3.3% drop in the average house price between October 2022 and October 2023. Similarly, the Halifax house price index showed a 3.2% drop year on year. These trends suggest that UK house prices might be going down.

In October 2023, Nationwide registered the average house price as £259,000, a 0.9% increase from an average of £258,000 in September 2023 but a decrease year on year. Meanwhile, the Halifax average house price was £282,000 in October 2023, a 1.1% increase from September 2023 but down from October 2022.

These monthly house price indices are based on mortgage lending and are thought to be less accurate than ONS data.

Rightmove also has a house price index updated monthly, but this is based on asking prices for listed properties rather than confirmed sales. In October 2023, the average asking price was £368,000, an increase of 0.5% from September 2023 but a drop of 0.8% from October 2022.

Will house prices go down in 2024?

Almost three-quarters of experts (73%) believe that house prices will fall between 5% and 10%, with more than half (55%) expecting prices to fall between 5% and 7.5%, and almost a fifth (18%) predicting a more substantial drop of between 7.5% and 10%.

This was according to an expert panel of academics, economists, and mortgage and savings experts, brought together by Finder, who were asked for their predictions on what will happen to the base rate for the rest of 2023 and the impact this will have on the UK housing market. You can read their house price predictions in detail below.

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• Table

Are UK house sales slowing down?

Data from the Bank of England shows that mortgage approvals were down 35% year on year in September 2023 compared to September 2022. The housing market has slowed down due to successive hikes in the base rate, resulting in high mortgage rates.

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• UK mortgage approvals

Expert house price predictions

Meet the panel

How much will house prices fall by autumn 2024?

Charles Read, a fellow in economics at the University of Cambridge, expects house prices to drop by 5% to 7.5%. He explained that “sharp rises in interest rates since the end of 2021 has reduced affordability of mortgages and new house purchases, pushing down prices”.

Kate Steere, deputy editor at finder.com and housing expert, agrees, stating that house prices will fall somewhat as “interest rates are likely to remain high throughout 2024, dissuading some buyers from borrowing large sums of money”.

David Hollingworth, associate director at L&C Mortgages, agrees that house prices will fall but not significantly, as he expects buyer confidence could grow. He commented that “as the rate outlook improves and mortgage rates stabilise and continue to improve, that could see buyer confidence begin to improve into next year, which will likely see a soft landing.”

Alan Shipman, senior lecturer in economics at The Open University, predicts that house prices will fall between 5% and 7.5% because “a house price fall of more than 7.5% would put many households into negative equity and trigger recession due to the squeeze on consumer spending”.

David McMillan, professor in finance at the University of Stirling, expects a more severe reduction of 7.5% to 10%. McMillan explained that household incomes will be “squeezed in several ways” next year, and “as much as these economic conditions will lead to price falls, they will also likely lead to a fall in the volume of transactions”.

Will there be a UK housing market crash?

Despite predictions that the housing market will slow down in 2024, experts are confident that a housing market crash is not on the horizon, with 8 out of 11 (73%) predicting that the UK will avoid a crash of this kind.

This is mainly because demand for housing is still expected to be significant, and housing supply is not currently meeting the needs of the UK population, with a shortage still prevalent.

Kate Steere, deputy editor at finder.com and housing expert, explains that the UK housing market is “in a period of adjustment, where prices have fallen and will continue to fall from their previous highs. But the fundamental concept of a shortage of supply and solid demand will stop house prices from spiralling downward.”

Luciano Rispoli, senior lecturer in economics at the University of Surrey, commented: “Despite higher interest rates, housing demand is still strong and supply structurally low.”

Stephen Sillars, savings and investments editor at Chip, agrees that “a major crash is unlikely”. He explains: “We simply don’t build enough houses in the UK, so an increase in supply will only go so far.”

Alan Shipman, senior lecturer in economics at The Open University, predicts that the government will put measures in place to prevent a housing market crash: “There is still a housing shortage, shown by the continued rise of rents in most UK cities; even if interest rates do not fall, the government will take action by year-end to ease the situation of first-time buyers, which will switch demand back towards house purchase and stabilise property prices.”

Sam Miley, managing economist and forecasting lead at CEBR, explains why high borrowing rates and a downward pressure on demand could mean a housing crash is still possible. He states: “Interest rates are expected to remain higher than their pre-crisis levels well into the mid-2020s. This makes borrowing more expensive, putting downward pressure on demand from buyers. It also makes debt servicing costs more expensive for those on flexible tariffs, which could encourage forced selling and hence an expansion in supply.”

Are house prices dropping in each UK region?

The housing market is different in each UK region, with some seeing a drop in house prices year on year while others are seeing growth.

London is the region with the highest average house price, at £536,000, but the region has also seen an annual drop of 1.4% in house prices in the year to August 2023.

The East of England has seen the biggest drop in house prices, which have fallen 1.6% year on year, but this region still has the third-highest average house prices at £351,000.

Meanwhile, although the North East is the region with the lowest average house price at £165,000, they have seen the biggest positive change in house prices, which have increased 3.6% in the year to August 2023.

Yorkshire and The Humber have also seen a rise in house prices of 2.2% in the year to August 2023, which put the average house price in this area at £213,000.

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• Regional house price growth

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