As we draw towards the end of 2022, there’s a lot of speculation about what will happen to the housing market over the coming 12 months.

With The Guardian reporting that house prices fell in November at their fastest rate for two and a half years, the price of an average home fell by 1.4% to £263,877 in November and annual growth dropped from 7.2% in October to 4.4% in November the signs are there in the data (also see below).

So, what of house prices over the next year? According to Zoopla, predictions are that house prices will drop by 5% next year with the driving factor being a steep increase in mortgage rates.

When it comes to mortgage rates, Zoopla predicts that they will fall to 4-5% in 2023 which is still considerably higher than the low 1% and 2% rerates we have become accustomed to over the past few years.

Whilst this tends to not be the news sellers want to hear, for buyers it means they are less likely to be able to purchase below the asking price with an average of just 97% of asking price achieved in November compared to the pretty steady 100% from June 2021.

What is important to consider is that if house prices drop by 5% in the next year, it still means there has been significant growth since 2019.

For example, between September 2019 and September 2022 the Land Registry highlights how UK house prices increased by 26%. A 5% drop will still represent a 21% increase in prices since September 2019: that’s still quite a significant jump in prices.

In closing, whilst the next year will certainly be an interesting market, there’s likely to be no double digit decreases with Zoopla adding:

‘We do not see any evidence of forced sales or the need for a large, double digit reset in UK house prices in 2023’

If you’re considering purchasing over the next 12 months or coming up to a remortgage, be sure to drop us a line and one of the team will be happy to assist. We work with a broad range of lenders and will be able to recommend the most suitable product for your situation.