House prices are expected to fall by two per cent next year, according to the latest reading from Zoopla, as the hangover from high mortgages appears to be dragging into next year.
While slipping house prices can often be an indicator of poor economic health, house prices still remain around £40k above pre-pandemic levels.
The property portal said that housing affordability needs to improve next year to entice buyers back to the market.
While UK house prices have fallen less than what the market expected over the year, five per cent mortgage rates have limited housing affordability for many would-be buyers.
“To see a meaningful reset when it comes to affordability, house prices will need to fall further as incomes increase,” the firm said.
“Assuming mortgage rates drop to 4.5 per cent by the end of 2024, Zoopla expects that house price growth will remain negative with prices down two per cent next year.”
A decision by the Bank of England to consistently hike interest rates in a bid to tackle rising inflation, sent the mortgage market into a frenzy and lenders to raise their prices.
UK homeowners and potential buyers searched on Google for a mortgage related term every 23 seconds in 2023, according to a study by the property group
Despite buyers remaining more cautious, the average time to sell a property in 2023 was 34 days – up from 25 days last year.
Throughout the year, Kensington and Chelsea in London emerged as the most expensive local authority in the UK with an average house price sitting at £1.20m.
The cheapest London borough was Barking and Dagenham where the average price of a home was £332k, followed by Bexley where the price of a pad typically went for £395k.