Resilient UK Housing Market to See Less Significant Price Falls in 2023

Property Price Projections

Real estate group JLL has forecast a 6% decline in property prices across the UK by the end of 2023, followed by a 3% drop the year after.

Despite the challenges posed by rising interest rates and the cost of living, the UK housing market has shown unexpected resilience, resulting in less significant price falls compared to the 2008 financial crisis.

Market Resilience Post-2008 Crisis

JLL attributes the housing market’s resilience to stricter lending rules implemented after the 2008 crisis and higher levels of equity among homeowners.

While there is pressure on the housing market, significant signs of distress are yet to emerge.

Bottoming Out in 2024 J

LL anticipates that UK property prices will bottom out in 2024, with annual declines in most markets expected. However, the report suggests a return to growth in 2025 as fixed rates decrease and economic outlook becomes clearer. Mortgage deals are projected to become more affordable, but higher rates will persist for some time.

Supply Shortage Persists

The undersupply of homes coming to the market remains a pressing issue. JLL predicts a cumulative shortfall of 720,000 homes between 2023 and 2028.

Challenges in the Housing Market

Marcus Dixon, a director of UK residential research at JLL, acknowledges the market’s challenges, emphasizing the need to address structural barriers to increase supply and mitigate affordability issues.

Nationwide House Price Data

Recent figures from Nationwide indicate that UK house prices defied expectations by rising 0.9% in October, although they remained 3.3% lower than the same period a year earlier.

The average home price increased from £257,808 in September to £259,423 in October. Nationwide anticipates subdued price growth.

Rental Costs on the Rise

While property prices are expected to decline, JLL warns that tenants will face rising rental costs over the coming years.

Rental growth is expected to exceed wage growth due to the lack of new rental stock and challenging interest rate conditions.

JLL predicts a 5% increase in rents across the UK in 2024, with higher growth in London. However, lower mortgage rates from 2025 onwards may lead to more tenants transitioning to homeownership, alleviating rental market pressures.

Share on Facebook «||» Share on Twitter «||» Share on Reddit «||» Share on LinkedIn

Advertisement: Download Vital Signs App (VS App)