UK house prices will not rebound after the slump because interest rates will still be higher than they have been for the last decade, according to S&P Global Ratings, which adds that the average value of a UK home will fall by 12% from peak-to-trough by the end of 2024.

The firm warned that there was “little prospect” of a strong recovery as mortgage holders and buyers will continue to face higher real costs of borrowing “for the foreseeable future”.

It predicts that UK house prices will fall by 6.6% in 2023, and then by a further 4.9% next year. After that, S&P expects the market will stagnate, with growth of just 1.4% and 3% across 2025 and 2026 respectively.

The worst of the pain of rate rises is still to come, with higher interest rates continuing to flow into the mortgage market, hitting homeowners coming to the end of fixed rate deals, S&P warned: ‘The pressure will intensify further. There is still some time to go before mortgage pain reaches its peak.’

Moody’s also forecasts that UK house prices will fall, although they have put the figure at 10% until the end of 2024 as mortgage rates soar and squeeze housing affordability.