UK House prices likely to fall, overvalued by a third

The analysis, first reported by The Times, is based on the affordability of a standard property, relative to mortgage payments, as well as the buyer’s earnings since the turn of the millennia. The analysis shows that underlying costs to buyers have been increased, leading to fall in affordability.

Following the sweeping tax cuts introduced in the mini-budget, the UK economy was thrown into turmoil, this analysis predicts further turmoil, specifically in the property market.

Swap rates have also been particularly affected in the weeks since Kwasi Kwarteng’s mini-budget, leading to further instability.

Five-year fixed mortgage rates went above six percent last week, for the first time since the financial crisis. Two-year fixed rates followed suit, also breaching six percent.

Bosses from high-street banks, lenders and building societies met the Chancellor on Thursday, to discuss how mortgage holders might be aided with the various economic challenges they’re facing, especially in regards to the higher cost of borrowing.

Oxford Economics described the current state of housing market as “the most worrying outlook” since the financial crash of 2008.

House prices are also set to fall in the UK, research from Knight Frank demonstrates that they believe that house prices will in 23/24.

Knight Frank predicts a five percent drop in house prices, for both 2023 and 2024, resulting in a 10% overall fall over two years. The data goes further, stating that prices will rise by two percent in 2025 and four percent in 2026, resulting in a five-year cumulative of 1.5%.

This should be accompanied by a relative stabilisation of the housing market, as supply and demand return to manageable levels.