Comparison site Finder.com brought together a team of academics, economists, mortgage and savings experts, who agreed that house prices will fall by as much as 10 per cent between now and next autumn.
Almost three quarters of the experts believe that house prices will fall between five per cent and 10 per cent, with more than half expecting prices to decrease between five per cent and 7.5 per cent.
Some 18 per cent predicted a more substantial price drop of between 7.5 per cent and 10 per cent.
One of the experts who predicted a steeper fall in prices of up to 10 per cent was David McMillan, a professor in finance at the University of Stirling.
McMillan explained that household incomes will be “squeezed in several ways” next year, and “as much as these economic conditions will lead to price falls, they will also likely lead to a fall in the volume of transactions.”
Meanwhile David Hollingworth, the associate director at L&C Mortgages agreed that house prices would fall but not significantly, anticipating that buyer conviction could strengthen.
He said: “As the rate outlook improves and mortgage rates stabilise and continue to improve, that could see buyer confidence begin to improve into next year which will likely see a soft landing.”
Market crash not on the horizon
Despite the pessimistic outlook for house prices over the next year, experts are confident that a housing market crash is not on the cards, with eight out of 11 predicting the UK will avoid that eventuality
Luciano Rispoli, senior lecturer in economics at the University of Surrey said: “Despite higher interest rates, housing demand is still strong and supply structurally low.”
Kate Steere, deputy editor at finder.com added 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 downward.”
However, Sam Miley, the managing economist and forecasting lead at the Centre for Economics and Business Research (CEBR) took a different view, and was the only expert who anticipates a market crash. He noted that high borrowing rates and a downward pressure on demand could precipitate a crash.
He said: “Interest rates are expected to remain higher than their pre-crisis levels well into the mid-2020s. 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.”
