The latest forecast by the estate agents Knight Frank suggests that the next two years will bring a major drop in average UK house prices, following a long period of price rises.
A fall of as much as 5% during 2023 and the following year is being predicted by the company, before prices start to go up again later in 2024. The Knight Frank figures suggest that these eventual rises will be 2% during that year, followed by a 4% percent increase during 2026. Looked at over a five-year period, this would actually amount to a 1.5% overall rise in house prices.
It is London that is expected to see the steepest regional drop in prices, with a 6% fall during 2023, followed by a further drop of 4% in the year after that. However, it should be noted that London is the UK region that has the highest house prices to begin with.
The report published by Knight Frank posits the expectation of further interest rate rises, predictions of higher inflation and the ever-increasing costs of energy as major factors in the expected house price drops.
According to Mortgage Solutions, the report argues that this will just be a reversal of the COVID-19 created spike in prices:
“As supply and demand continue to normalise, the dominant theme of the next two years will be tighter budgets due to higher monthly interest bills.”
Some mortgage advisors with the CeMAP qualification may welcome this drop, with many clients priced out of the market now.