British Home Prices Expected to Slip Further, But Not Crash Down According to Recent Poll

[1/3] A construction site in Liverpool, Britain (Phil Noble/Reuters, June 2, 2023) LONDON, June 2 (Reuters) - Despite the COVID-19 pandemic and its aftermath, British home prices are expected to slip further this year than previously thought, but a crash is unlikely, according to a recent Reuters poll.

The poll, conducted from May 16-31, showed that average house prices are expected to fall 3.0% across 2023, deeper than the 2.4% drop predicted in February's poll but nowhere near the crash some were forecasting.

The lowest forecast was for a 10.0% fall.

The prices are expected to remain flat in 2024, and then rise 3.1% the following year.

In the last poll, they were expected to rise 1.0% next year and 3.5% in 2025.

The poll of 23 market specialists showed that most expect the decline to be in the single digits, with the median fall forecast at 4.3%.

However, the worst-case scenario was for a drop of 17.5%.

The recent rise in borrowing costs, already at a level not seen in almost 15 years, means house prices fell on average 3.4% in the 12 months to May, the most since 2009, according to Nationwide.

The Bank of England's aggressive rate hiking path, aimed at taming inflation and high borrowing costs, means mortgage rates won't fall any further until next year, according to Andrew Wishart at Capital Economics.

As a result, the high cost of mortgage borrowing will prevent a recovery in demand, lending, and sales until interest rates are cut, Wishart added.

The capital's housing market, long a magnet for foreign investors but which were hit by Brexit and COVID, will see a smaller fall of 3.3% this year before rising 0.2% in 2024 and 4.0%