Uk

House prices will not rebound even after slump ends, economists warn – latest updates


The worst of the UK’s house price falls will not hit until 2024, just as values in other countries are starting to stabilise, new forecasts show.

House prices will fall far more steeply in the UK over the next two years than in other advanced economies such as Germany, France and the US, Moody’s has warned.

The credit ratings agency said a combination of higher inflation, the enormous house price growth recorded during the pandemic property boom, and the large share of borrowers on short-term fixed-rate mortgages mean the UK is particularly exposed to a longer housing downturn.

Moody’s said: “We expect the Bank of England, faced with the responsibility to bring stubbornly high inflation down, to maintain a tight monetary policy stance through 2024. The effects of interest rates on housing demand in the UK are therefore likely to be acute and prolonged.”

It expects UK house prices will fall by 4pc across 2023 and then by 6pc across 2024 – this will be the worst performance across the nine Western countries tracked by Moody’s, which encompass the US and the largest economies in Europe.

Though it forecasts that Germany will see a larger house price drop of 5.7pc this year, the downturn there will be more short-lived, with falls of just 1.6pc in 2024.

The US will see nominal house price growth of 0.2pc in 2023 and a fall of 3.8pc in 2024.

Although early signs suggest UK mortgage rates are starting to stabilise after two months of rocketing growth, analysts are not anticipating large material drops soon.


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