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When Will House Prices Start Dropping? | Wild & Co

Falling real estate market

One of the most common discussion points amongst Hackney estate agents concerns the overall housing market and exactly when what has been a surging housing market will hit its peak, as well as what this new normal will look like.

With the average price of Hackney property topping £720,000 and a range of market pressures affecting a wide variety of buyers at most levels of the property ladder, people are wondering at exactly what point prices will fall significantly to match these conditions.

To a degree, this has already started, with Rightmove’s final House Price Index of 2022 noting a larger fall in average house prices than the normal winter dip.

Property experts are split with regards to exactly how far it could fall, with the expectation being a decline of 5-12 per cent, although this could fall as far as 20 per cent if a black swan event startles the market in the same way the September fiscal event did.

For some experts, such as Robert Gardner of Nationwide, the belief is that house prices will fall at a relatively modest rate but one that is more of an incline and a slide than a potential crash, with history showing that the UK housing market rarely sees outright crashes.

Most major changes happen at slow speeds according to several experts, although one for Capital Economics noted a potential early warning sign that house prices could potentially fall in a somewhat unexpected way.

A lot of information can be gleaned from the rate of the initial descent of prices, and in this case, that first dip is sharper than either the 2008 global financial crisis or the property slump in the early 1990s.

A lot of it will be based on mortgage and market interest rates, which are themselves based on the rate of inflation and a range of other factors both inside and outside the housing market.