The ‘F’-word - house prices to fall whatever the agents call it

The Guild of Property Professionals has issued a warning that house prices are going to fall.

A 645-word statement from the Guild refers to “price moderation” and “a slowdown” and “a correction” and the need for “recalibration” on prices.

Guild managing director Kris Mclean says: “It is expected that inflation will peak during the final quarter of 2022 before falling back over the course of 2023, and unemployment looks likely to remain lower than the 10-year average of 5.3 per cent. The Global Financial Crisis, caused by banks lending more than borrowers could afford to pay, led to the more stringent mortgage lending criteria imposed since 2014. Today, only an estimated 4.2 per cent of homeowners have less than 10 per cent equity in their home.”

He notes that annual house price growth in the UK has moderated back from the double-digit price growth of recent months but insists the current situation is better than in past low points in economic cycles. 

“At 7.2 per cent in the year to October, annual price growth remains considerably stronger than the 3.3 per cent average between 2010 and 2019. Since June 2020, average property prices have risen by close to £50,000, the equivalent of 24 per cent, with lockdown and lifestyle changes spurring the market” says Mclean.

“Single-digit price correction is predicted for 2023/2024 before price growth is anticipated to return in 2025. Buyers will continue to benefit from the 0 per cent rate of stamp duty up to £250,000 until March 2025. With almost one in three movers ‘needs-based’, such buyers will present sales opportunities. However, realistic pricing for market conditions will be paramount to achieving a sale as the market recalibrates.”

He says that demand for quality rental housing continues across the UK. 

“A shortage of stock and additional demand from prospective buyers, who may well rent as opposed to buy, continues to fuel prices. Average rents in the UK rose again in October to £1,171. Excluding London, average monthly rents now stand at £976. Annual rental growth in Scotland has doubled in the past year, with emergency legislation passed by the Scottish Government to freeze rents and evictions for both the private and social rented sectors until at least March 21” he comments. 

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