Will house prices drop in 2023?

E83HKR Giving house keys

THE average cost of a home across the UK currently stands at £362,452 – but are prices set to fall further?

Average UK house prices soared by 9.5% in the year to September, according to the ONS.

Are house prices likely to drop in 2023?

Property prices had surged due to pent-up demand following coronavirus, a lack of homes on the market driving demand up and the end of the stamp duty holiday.

But they saw the biggest monthly fall since June 2020 in November to £263,788, according to Nationwide.

At the start of December, Rightmove reported that the average asking price dropped to £359,137 – down by £7,862 from the previous month too.

Rightmove’s January data showed that house prices rose by 0.9% – to £362,438. 

This is the highest at this time of year since January 2020.

Most recently, according to the property website, the average asking price for a home rose by £14 in February is £362,452.

Rightmove said it is the smallest increase it has recorded between January and February, in records going back to 2001.

The house price slowdown late last year followed mortgage rates hitting a 14-year high in September, though they have now fallen back slightly.

This was caused by political and economic turmoil following former Chancellor Kwasi Kwarteng’s mini-Budget.

An increase in mortgage rates has meant people thinking about buying homes are holding off, which in turn sees house prices drop.

Are house prices likely to go down in 2023?

Tim Bannister, director of property science at Rightmove, said house prices could go up towards the end of the year despite having fallen in recent months.

He said: “We expect that the full effect of affordability constraints and last year’s mortgage rate rises will hold back some segments of the market in the first half of the year.

“But our leading market indicators may start to identify some green shoots of growth that will go on to strengthen in the second half of 2023.”

However, Nick Morrey from Coreco Mortgages, said house prices could drop.

“Given prices have risen 20% or more since the first coronavirus lockdown, a correction was always on the cards.

“Current predictions are for a reduction in prices of around 10% but that would only put prices back to where they were in around January last year.

“Plus, despite the cost of living crisis we are seeing plenty of enquiries for purchases and properties for sale are still in short supply in many areas.”

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