You are here: Home - Mortgages - First Time Buyer - News -

House prices predicted to drop 4.5% next year

Written by: John Fitzsimons
The average property will see its price drop by around 4.5% next year, a leading consultancy predicts.

A report from the Centre for Economic and Business Research (CEBR) suggested there would be a “peak annual contraction” of 6.2% in the third quarter, blaming the combination of sharp rises in mortgage rates, rising cost-of-living pressures, and the potential increase in unemployment from the UK entering recession.

The CEBR said that while the new energy price guarantee would provide some “respite”, the other negative forces would “plague the economy” for at least the next year.

It stated that those unable to purchase a property might welcome the idea of falling prices, as it should make home ownership more affordable. However, it cautioned this would “likely prove misguided” since a contracting housing market would bring economic pain for everyone.

CEBR argued that affordability would not improve, since lenders would likely push down loan-to-value ratios throughout any downturn, reducing accessibility to affordable mortgage finance further.

Economic threat

The report stated that falling prices pose “an economic threat” irrespective of an individual’s homeownership status, noting that falling prices dampen confidence, which in turn lead to lower consumer spending, deeper recessions and higher unemployment.

Karl Thompson, economist at CEBR and author of the report, said: “Within the current climate, therefore, there seem to be few advantages to the anticipated fall in house prices. In light of this, it may now be time to seriously consider reviving the stamp duty holiday – or even better yet, a complete overhaul of property taxation – in order to keep some life in the housing market and thus the UK economy more broadly.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Seven ways to get help with energy bills this winter

We knew today’s announcement was going to be painful, but it’s still a shock to the system. When this kick...

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week