A panel of economists at the Japanese bank Nomura has predicted house prices in the UK will fall by more than most experts have dared to suggest.
The panel believe the UK will see the average house price fall by 15 per cent by the middle of 2024. This is the central projection in a range of between ten and 20 per cent that they believe prices need to fall by to restore the balance between incomes and interest rates, given the squeeze on the former and the increases in the latter.
If this prediction proves true, people seeking houses for sale in Leicester may get some unexpected bargains, which may counterbalance the extra cost of mortgage repayments produced by recent interest rate rises.
Explaining their forecast in a research note, the panel, made up of economists George Buckley, Andrzej Szczepaniak and George Moran, acknowledged that it was an outlier, stating that it “would be a larger fall than assumed by the Bank of England, Office for Budget Responsibility and consensus”.
The panel predicted that base rates will peak at 4.25 per cent this year and then fall to 3.5 per cent in 2024, providing an extra boost for buyers. They stated: “A weaker housing market, and economy to boot, should provide justification for the Bank to end its tightening cycle soon… and begin easing policy in 2024.”
While different property surveys all indicate that prices have been falling since last summer, predictions vary sharply over how much prices will fall by.
A Reuters survey carried out in December found the average drop predicted by analysts was 4.7 per cent over the course of 2023, with a ten per cent overall drop from the 2022 peak.
Halifax, which recorded falls of 2.4 per cent in November and 1.5 per cent in December, forecasted an eight per cent decline in prices in 2023.
