Will UK house prices and rents fall in 2023?

Will UK house prices and rents fall in 2023?

With inflation rising, there’s lots of talk of a recession, and this has people concerned about property prices falling. These numerous headlines have got us thinking, does a recession always mean property prices will drop? What exactly is in store for the property market this year? Is it a good time to buy or a good time to sell?

These are topics at the forefront of many of your minds, whether you’re a landlord, a seller or a first-time buyer. Here’s all you need to know…

Adding to this, the average price of property coming to market hit a new record for the fourth consecutive month, rising to £367,501. May's increase of 2.1%, which is £7,400 in cash terms, is the highest at this time of year since May 2014. It also means house prices have increased by a whopping £55,551 in the two years since the housing market paused during the pandemic. These increases we’ve seen in house prices show little sign of abating. But, the question on everyone’s lips – how long can this house price and rent rise last? And will 2022 be the year we see these drop? Let’s explore…

How will house prices change this year?

Halifax expects house prices to fall in 2024 if interest rates and the cost of living keep rising. There’s no doubt that the property market has been really strong in recent months, with prices seeing annual growth of more than 10% during the pandemic. Property prices did fall slightly towards the end of 2022, but asking prices defied expectations in January 2023 by rising 0.9% according to property website Rightmove. Rightmove did also report that properties took an average of 52 days to sell in December 2022, up from 32 days back in May so it will be interesting to see if this continues.

Are house prices going up or down?

House prices are falling slightly from a very high point during the pandemic. Although they have dipped, they are still very high by historical standards and have been rising much faster than wages. If you are interested in selling, it’s worth finding out the value of your property sooner rather than later. If you’re in a rush, you can find out in 60-seconds below.


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When will house prices fall?

House prices rise and fall all the time. Rising mortgage costs and the broader cost of living crisis could push house prices down by about 8% next year, according to a forecast by the lender Halifax. House prices have probably reached their peak, which is good news for sellers. It could be advantageous to get your property on the market before prices dip.

Should I sell my house now or wait?

If you’re thinking of selling, there are some things to be aware of. House prices could start dropping after many years of price increases so be prepared for this. It might be a good time to capitalise on house price growth and the existing buyer demand before it wanes, especially if you're selling a second home or rental property. Of course, the answer to this question essentially depends on your individual circumstances. It’s always a good idea to grab a quick and easy valuation. The price you could sell for might just surprise you…

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*Zoopla Rental Index Q1 2022
**Rightmove House Price Index May 2022

Detached properties increase by £78,000 in cash terms between 2020 and 2022

Figures from Nationwide Building Society show that the average price of a detached property increased by 26% last year. That’s an increase of 5.9%. Flats were also a very popular type of property amongst buyers, increasing in price by 13.4% or £23,000. Terraced properties and semi-detached properties had the highest increases in price, both rising by 14% last year.

When will the Bank of England base rate rise again?

The Bank of England raised interest rates to 3.5% in December 2022 – the highest for more than 14 years. Just one year ago, the base rate was 0.1%. So, this is the ninth time in a row that officials have raised rates to try and tackle inflation. If there’s a further increase on February 2, it will become the tenth consecutive interest rise so far. It’s worth exploring which mortgage could work best for you.

How will raising interest rates help tackle inflation?

Inflation is a measure of the cost of living. The Bank of England is raising rates to try and bring it down to a target of 2%. In theory, if we raise interest rates, borrowing becomes more expensive for us all and so we spend less and save more. Those of us on fixed mortgage deals are shielded from higher rates for now but if you’re set to expire soon, you’ll have to refinance at higher rates.