UK house prices will not rebound after the slump because interest rates will still be higher than
they have been for the last decade, economists have warned. The average value of a UK home will
fall by 12% from peak-to-trough by the end of 2024, according to S&P Global Ratings.

It warned that there was “little prospect” of a strong recovery as mortgage holders and buyers will continue to face higher real costs of borrowing “for the foreseeable future”. It predicts that UK house prices will fall by 6.6% in 2023, and then by a further 4.9% next year. After that, S&P expects the market
will stagnate, with growth of just 1.4% and 3% across 2025 and 2026 respectively.

The worst of the pain of rate rises is still to come, with higher interest rates continuing to flow into the mortgage market, hitting homeowners coming to the end of fixed rate deals, S&P warned the pressure “will intensify further”. “There is still some time to go before mortgage pain reaches its peak,” it said.
Moody’s also forecasts that UK house prices will fall, although they have put the figure at 10%
until the end of 2024 as mortgage rates soar and squeeze housing affordability.

Moody’s said that the UK’s booming housing market would experience a 4% drop this year and a 6% fall in 2024, making the UK property sector the worst among big, developed economies. More than 90% of all
mortgage holders in the UK are on fixed deals spanning between two and five years. The bulk of homeowners have yet to experience the jump in interest rates from 0.1 per cent to 5% because of
the duration of their loans, but more than 1 million will have to renew their loans in the second half of this year.

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