House prices could fall by up to 10 per cent between now and Autumn 2024, research by Finder.com has found.
The research brought together an expert panel of academics, economists and mortgage and savings experts, to ask them for their predictions on what will happen to the base rate for the rest of 2023 and the impact on the economy.
Almost three quarters (73 per cent) of the experts believed that house prices will fall between 5 and 10 per cent, with more than half expecting prices to fall between 5 and 7.5 per cent.
Additionally, 18 per cent of the panel predicted a substantial drop of between 7.5 and 10 per cent.
University of Stirling professor in finance, David McMillan, was one expert who expects this substantial drop and explained that household incomes will be “squeezed in several ways” next year.
He added that “as much as these economic conditions will lead to price falls, they will also likely lead to a fall in the volume of transactions”.
Avoiding a crash
Despite the predicted fall in house prices, the experts are “confident” that a housing market crash is not on the horizon, with 73 per cent of the panel predicting the UK will avoid such a crash.
Finder.com deputy editor, Kate Steere, commented that the UK housing market is “now 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 downwards.”
However, Sam Miley, the Centre for Economics and Business Research managing economist and forecasting lead, was the only expert who anticipated a housing market crash in the future.
“Interest rates are expected to remain higher than their pre-crisis levels well into the mid-2020s,” he stated.
“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.”
Possible recession
Additionally, almost half of the experts (46 per cent) believed the UK could enter a recession during 2024 if the base rate does not come down before the end of the year.
McMillan explained that a recession is “likely”, explaining that “the UK economy has essentially shown zero growth since emerging from the Covid-19 bounceback”.
He also outlined various factors involved, such as the unemployment rate slowly ticking up and the number of vacancies declining, and pay growths possibly already peaking.
On the other hand, 27 per cent of the panel did not believe there will be a recession in 2024.
Chip savings and investments editor, Stephen Sillars, commented: “One small positive for the UK economy in 2023 is it has shown itself to be resilient, so I don’t feel that a base rate cut is needed imminently to avoid a recession.”
A further 27 per cent of the panel believed that it could go either way, with Steere noting that “economic growth has been weak, essentially showing zero growth for most of this year.
