17, November 2023, LONDON – A panel of experts are in agreement that house prices will continue to fall by as much as 10% between now and autumn 2024, according to new research conducted by personal finance comparison website, finder.com.

This comes as house prices experienced the first annual fall in more than a decade, according to the ONS house price index which showed that house prices dropped by 0.1% in the year to September 2023.

Finder brought together an expert panel of academics, economists, mortgage and savings experts, to ask them for their predictions on what will happen to house prices over the next year, and whether there will be a housing market crash.

Almost three-quarters of the experts (73%) believe that house prices will fall between 5% – 10%, with more than half expecting prices to fall between 5% – 7.5%, and 18% predicting a more substantial drop of 7.5% – 10%. However, the majority of experts agree a housing market crash will be avoided.

House prices predicted to fall due to high interest rates and reduced affordability

Charles Read, fellow in economics at the University of Cambridge expects house prices to drop by 5% – 7.5%. He explained that “sharp rises in interest rates since the end of 2021 has reduced affordability of mortgages and new house purchases, pushing down prices”.

David McMillan, professor in finance at the University of Stirling expects a more severe reduction of 7.5% – 10%. McMillan explained that household incomes will be “squeezed in several ways” next year and “as much as these economic conditions will lead to price falls, they will also likely lead to a fall in the volume of transactions.”

Alan Shipman, senior lecturer in economics at The Open University, predicts that house prices will fall between 5% and 7.5% because “a house price fall of more than 7.5% would put many households into negative equity and trigger recession due to the squeeze on consumer spending”.

David Hollingworth, associate director at L&C Mortgages agrees that house prices will fall but not significantly, as he expects buyer confidence could grow. He commented that “as the rate outlook improves and mortgage rates stabilise and continue to improve, that could see buyer confidence begin to improve into next year which will likely see a soft landing.”

Experts agree that a UK housing market crash is not on the horizon

Despite a rather dire outlook for house prices in 2024, experts are confident that a housing market crash is not on the horizon, with 8 out of 11 (73%) predicting the UK will avoid a crash of this kind.

Luciano Rispoli, senior lecturer in economics at the University of Surrey commented: “Despite higher interest rates, housing demand is still strong and supply structurally low.”

Kate Steere, deputy editor at finder.com added that the UK housing market is “now in a period of adjustment, where prices have fallen and will continue to fall from their previous highs. But the fundamental concept of a shortage of supply and solid demand will stop house prices from spiralling downward.”

Stephen Sillars, savings and investments editor at Chip, agrees that “a major crash is unlikely”. He explains: “We simply don’t build enough houses in the UK, so an increase in supply will only go so far.”

Sam Miley, managing economist and forecasting lead at CEBR was the only expert who anticipates that a housing market crash is on the horizon, citing high borrowing rates and a downward pressure on demand as the key causes: “Interest rates are expected to remain higher than their pre-crisis levels well into the mid-2020s. This makes borrowing more expensive, putting downward pressure on demand from buyers. It also makes debt servicing costs more expensive for those on flexible tariffs, which could encourage forced selling and hence an expansion in supply.”