HOUSE prices could fall by 10% next year according to property experts at Savills.
And the amount that house prices could fall will vary by region – with some seeing prices cut by 12.5%.
But Savills predicts that house prices will rise by 6% in nominal terms over the next five years.
Next year, house prices in London are expected to take the greater hit, falling by 12.5%.
Property prices in the North West, Yorks and Humber, North East and Wales will see the lowest rate of decline – with an 8.5% drop.
The estate agent blames rising interest rates and the cost of living crisis for the temporary fall in house prices.
Interest rates hit 3% after the Bank of England raised them by 75 basis points on Thursday (November 3) in a bid to bring down rampant inflation.
LiftingÂ interest ratesÂ is meant to encourage people to save, rather than spend, which in theory should help bring rampant inflation under control.
The BoE predicts thatÂ inflationÂ will peak at 11% in October and then remain above 10% for a few months after.
Lucian Cook, Savills head of residential research, said: “A new Prime Minister and fiscal policy u-turns appear to have reduced some of the pressure on interest rates, but affordability will still come under real pressure as the effect of higher interest rates feeds into buyers’ budgets.
“That, coupled with the significant cost-of-living pressures, means we expect to see prices fall by as much as 10% next year during a period of much-reduced housing market activity.”
The annual rate of house price growth also slowed to 7.2% in October down from 9.5% in September.
AÂ typical UK propertyÂ now costs Â£268,282, according to Nationwide’s index – down Â£3,977 from September when the average price was Â£272,259.
But, some experts have dampened down their predictions for house prices since then as the turmoil subsided.
It’s worth noting that house price predictions are just that, and no one can know for sure what will happen.
And experts in the field, including Nick Morrey of Coreco, argue that because the UK has a low supply of housing, predictions that house prices may collapse should be taken with a pinch of salt.
Ben Thompson of the Mortgage Advice Bureau previously told The Sun: “The most likely scenario as things look today, is that demand falls back from current levels and we do see a flattening off in house prices from now onwards, and probably single-digit falls on and off for a few months.”
Nathan Emerson, chief executive of Propertymark said: “The potential for a softening of prices isnât as terrifying as it sounds if we remember that prices have inflated by nearly 20% over the last two years.”
Indeed, Savills own research suggests that house prices will start to recover from 2024 onwards – especially now that the Bank of England confirmed that the base rate will likely peak at 4.5% next year instead of 5%.
And Savills said that by 2027 the average house price will be Â£381,578 – Â£22,290 more than it is now.
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