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UK house prices predicted to drop by at least 10% in 2023

House prices in the UK are likely to fall by at least 10% next year as mortgage providers pull deals and raise interest payments to levels not seen since before the 2008 financial crisis, property experts have predicted.

Nearly 300 mortgage deals have been withdrawn by banks, and building societies after a fall in the pound fuelled forecasts of a jump in the Bank of England base rate to nearly 6%, with those offers remaining on the market entailing huge borrowing costs for potential buyers, reducing how much they can pay for properties.

“I think we can expect to see a significant fall in house prices, perhaps around 10% next year,” said Ray Boulger, senior mortgage technical manager at John Charcol, told BBC Radio 4’s Today programme on Wednesday.

“The key factor in house prices is how much people can afford on their monthly mortgage. The biggest issue is the monthly cost. With the cost shooting up so far, many people thinking of buying are going to rethink those plans. They may not buy at all. If they are going to buy, they will buy at a lower level.”

Analysts at Credit Suisse have warned that higher interest rates, inflation and the risk of a recession could lead to house prices falling by between 10% and 15% next year.

Andrew Wishart, the senior property economist at Capital Economics, also predicted a house price slump of 10%-15%. “The rise in market interest rates that has already happened will push up mortgage rates to at least 6% and reduce the size of loans that lenders can offer,” Wishart said. “The resulting drop in buying power makes a significant drop in house prices inevitable.”

HSBC and Santander are the biggest lenders to have pulled mortgage products, with Bank of Ireland, Clydesdale Bank, Post Office Money and building societies, including Monmouthshire, also among the brands to have withdrawn products as lenders struggle to price loans.

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