As mentioned on another thread and commented on by @KievLoverTwo I found this old debate between "two property experts" on what would happen to house prices in 2023 & 24 (the debate was in June 23). The two men in question were Rob Dix, co-founder of the property forum, Property Hub, and Charlie Lamdin, founder of property website BestAgent.
What will happen in 2023?
Charlie: My view is that house prices will be experiencing their steepest falls by the end of this year, but we won't see the evidence of that reported for six to nine months after that.
Rob: My guess is that we'll see prices fall in areas like the South East and hold firm in others, resulting in a small decline at a national level. But I say 'guess' rather than 'prediction' because trying to establish the overall shape of the market is hard enough, but pinning a precise timescale on it is basically impossible.
The big variable overlaying all of this is inflation. If inflation starts to come under control over the summer, and the markets believe the Bank of England will cut rates over the medium term, that will support current pricing – but if rates seem to be staying higher for longer, the market will come under pressure.
What about house prices in 2024 and 2025?
Rob: We do need to be aware that we're due to have a general election by the end of January 2025. It's possible that they'll introduce support for first-time buyers this autumn or next spring, and attempt to get a feel-good factor going throughout next year.
I don't think it's possible to put a number on it with any kind of confidence, but we do need to be aware that in real terms (after deducting inflation) house prices have fallen significantly. House prices are currently around 4 per cent below their peak according to Nationwide, but in real terms, again according to Nationwide, prices are around 12 per cent below their peak.
With only a minor further decline plus continued inflation, we could be looking at a 20 per cent real terms fall by the end of this year.
That's a significant correction (more than 2008), even if in nominal terms it doesn't look like it.
Charlie: In brief, 2024 will see much lower house prices because of the time lag effect of interest rates and price reporting. The worst of the falls will become apparent in 2024. It's the momentum of the economic situation, it takes time. The momentum in prices is gathering speed in the downward direction behind the scenes. On average, with significant regional and local variations, I'm expecting prices to fall a total of 35 per cent in nominal terms over approximately three years, from their peak in 2022, to 2025 as the UK goes through its own financial recalibration on the back of global financial events.
Asked why he (unlike Charlie) didn't see prices falling much in nominal terms, Dix replied that "Over the last few years we've seen the price of houses go up along with the price of everything, but we haven't seen typical boom-time behaviour: no unrestrained lending, no 'I'd better buy now because prices will only ever go up' attitudes from buyers, and so on.There was a sudden spike in activity due to lifestyle changes around Covid, but that's not the same thing.
This makes me believe that the market will nominally go largely sideways for a year or two, which would still be a significant correction in real terms.
The tests that were brought in after the financial crisis means that buyers have been stress-tested up to – and beyond – the mortgage rates we see today.
This doesn't necessarily mean that new buyers will be willing to pay the current level of prices, but it will reduce the number of forced sellers.
I think Dix sounds pretty sensible whereas Charlie presumably just wanted to grab attention with his click bait 35% price fall in nominal terms in 3 years. I'm sure the Charlie lovers will disagree but time will tell, I guess.