UK housing market to slump in 2023 due to recession, say experts

The housing sector in the United Kingdom (U.K.) will reportedly plummet dramatically after a rough 2022, as the nation struggles with recession and increasing mortgage rates, warn industry experts.

Housing costs have already begun to decline month over month as the cost of the living problem has gotten worse due to surging inflation and rising interest rates. As per Halifax, the average property price fell 2.3% from October to November, the highest level since the beginning of the financial crisis in 2008.

Apparently, all housing signs are flashing red as the downturn is anticipated to worsen as interest rates are set to rise and the U.K. faces a protracted recession.

The Bank of England is likely to keep raising interest rates through 2023, from their current level of 3.5% to a peak of approximately 4.75%, further depressing the consumer demand.

Although some experts warn that in the most unlikely scenario, house prices could drop by 15% to 20%, property specialists predict that this would likely lead to property price losses from between 5% and 12% next year. According to the most recent figures from the Office for National Statistics, house prices increased 12.6% in the 12 months leading up to October.

Mortgage rates skyrocketed to above 6% in September after Kwasi Kwarteng’s dismal mini-budget, a figure last seen in 2008. As per Moneyfacts, the average five-year fixed mortgage rate has now decreased to 5.6%, although it is still significantly higher than a year ago.

In 2023, British building societies and banks anticipate lending 23% less to homebuyers, returning mortgage volume to its pre-pandemic level and bringing an end to a two-year surge that increased home prices by over a quarter.

The Bank of England has recently warned that 4 million homeowners will see their mortgage payments rise by £250 ($302) to £1,000 ($1207) per month next year, while subsequently220,000 households would experience significant financial hardship.

Source credit:犀利士

Puja More

Puja More holds a graduate degree in Computer Science from the University of Pune. Nurturing her passion of playing with words however, Puja undertook content writing as a career path and boasts of rich experience in content production, copywriting, and digital marketing. Presently, Puja writes articles on technology, business, and healthcare for and a few similar portals.