New forecast says house prices will stay flat and NOT fall

An influential housing market analyst says it now looks like house prices will stay flat in 2023, rather than fall.

Nicholas Mendes, mortgage technical manager at John Charcol, says: “Only a few months ago was the market prediction of a 10 to 20 per cent correction in property prices due to inflation, mortgage rates, and fear that there was a long recession around the corner.

“Fast forward to recent times, markets will be waiting in anticipation of [Bank of England governor] Andrew Bailey’s comments and retracting his initial doom and gloom forecasts, lenders are now competing with each other again with rates on a continual decrease since the start of 2023, and Rightmove's recent report highlight property prices actually increased 0.3 per cent in January.

“Despite the base rate rising to 4.0 per cent with HSBC and Virgin are offering fixed rate deals of sub 4.0 per cent, with other lenders expecting to follow. The last time fixed rates were below the Bank of England base rate was in 1991.

“Also, inflation looks to be on a downward trend, which will mean by the end of the year the base rate will also decrease.”

Mendes says the picture looks very different to what was painted as recently as the end of 20922. 

“I previously predicted the downturn isn’t going to be as severe as many had been forecasting. With mortgage rates coming down, and the demand still waiting in the wings for properties to come on the market, we find ourselves in a similar position as early 2022 when there was a lack of stock and high demand pushing up property prices despite inflation increasing.

“Now I don’t expect to see property prices to continue increase at the same rate of knots as they did in the aftermath of the pandemic, but I would expect to see a period over the next few months where different reports will be posting variations of property prices increases and decreases (due to the way they collate their data). 

“Overall by the end of 2023 I would expect to see property prices remain flat, with 2024 arriving before we see the first signs of property price increases.”

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