The housing market will see its biggest decline since the financial crash in 2009, according to economic experts surveyed by The Times.
Rising mortgage costs and a likely recession are being blamed as the two main reasons for the looming situation. Two thirds of the economists surveyed predicted prices will fall by more than 4%, with most warning of near-double-digit drops.
Sanjay Raja, chief UK economist at Deutsche Bank, told The Times: “A double-digit price fall would not be surprising. If typical mortgage rates remain above 5%, together with an unprecedented squeeze on household incomes, it is hard to see how house prices can avoid taking a significant hit in 2023.”
The Bank of England warned homeowners are facing an average £3,000 rise in mortgage payments this year. Cheaper mortgage rates will help the housing market achieve a soft landing in 2023, Nationwide said, and avoiding forced sales will bolster its prospects further.
Andrew Goodwin, chief UK economist at Oxford Economics, said house prices were 30% overvalued based on affordability metrics. “The number of forced sales should be limited by the high share of fixed-rate mortgages and low peak in unemployment, but a correction in prices looks likely.”