0:01 AM, 12th January 2023, About 9 months ago 4
After several real estate firms, lenders and property platforms predicted that house prices would fall in 2023 by up to 10%, one organisation says that a steep fall won’t happen for a range of reasons.
The National Association of Property Buyers (NAPB) says that a predicted house price crash for the UK ‘looks increasingly unlikely’ but prices will continue falling for up to the next six months.
The organisation’s spokesman, Jonathan Rolande, said: “Although the outlook for 2023 in terms of house prices is far from rosy, the price crash, much feared by many, and wished for by a few, seems increasingly unlikely to happen.
“It is almost certain that prices will continue to fall during the first three to six months of the year.
“But, if the economic and political landscape remains relatively stable, we may see a slight recovery in the second half of the year, meaning we could end 2023 with prices back around where they were at the beginning of 2022.”
He went on: “We need to be clear; we are not yet on safe ground. The market still has a long way to go before it steadies and even longer before prices begin to lift again.
“And those waiting for the bounce will need to be patient.”
Explaining why he felt the market has the potential to bounce back he said: “There are a number of factors at play here.
“Rocketing interest rates, a cost-of-living crisis, a pandemic and mortgage products are being withdrawn.
“The list goes on and yet we have not seen a price freefall.”
He added: “Rates have increased but not to levels that crippled borrowers, even though they were very unwelcome, especially as other household costs were rising too.
“With most people on a fixed rate loan, the effect was diluted – we didn’t see all mortgages shooting up in price overnight.
“The reduction in long-term rates has helped too, they are still much higher than a year ago but a downward trajectory breeds consumer and lender confidence.”
Other factors affecting house prices include a low appetite for risk from lenders so there will be a lower risk of repossession and a shortage of property to buy.
Mr Rolande said: “Lenders have held their nerve too. Thanks to lower percentage lending for the last decade or so, their exposure to risk is lower than it was in previous dips meaning the risk of repossession is far less.
“The general shortage of available property, exacerbated by the suspension of construction work during the pandemic, the frenzy to buy holiday homes and let property means that despite suppressed demand, there is still a chronic shortage of property – that will shore up prices.”