A recent calculation by the Office for Budget Responsibility (OBR) predicted that house prices will fall by 1.1% in 2023. You can browse here https://www.martinlegacyholdings.com/sell-my-house-fast-in-hephzibah-ga/ to see more.
What caused the 1.1% drop?
The OBR’s estimate is based on a number of “assumptions about future market conditions”, including Brexit, a decreasing population and less demand for housing, among other factors. They also predict that mortgage rates will increase to 5.3%. Finally, they assumed that wage growth will remain at 2%.
So in 2023, house prices will be lower by 1.1%.
How will this affect the economy?
The real concern is that low house prices might lead to a net decrease in household wealth (i.e. less overall wealth) – however, a fall in house prices doesn’t directly lead to a fall in a household’s net worth if they’re paying off their mortgage or just have savings and investments (like an ISA). Therefore, we can’t predict how this situation would affect the economy. Depending on where and how a person has invested their money, their wealth could increase or decrease as a result of lower house prices.
How will this affect the property market?
A decrease in house prices would probably be good news for first-time buyers, as it would make houses cheaper. However, there is no guarantee that they can afford to buy houses when they’re cheaper – there will always be people trying to buy, meaning that the price may remain high if demand stays constant. As for the housing market, first-time buyers will only have one less option to choose from, but this won’t directly affect prices – just time. Therefore, there is no room for complacency and a house price drop will not cause an immediate crash in the property market.
How will this affect the government?
The government predicted that there would be a surplus in 2020, and house prices falling by 1.1% in 2023 would mean that they wouldn’t have achieved this. However, there is no commitment from the government to produce a surplus in 2020 as it’s not part of their manifesto. Therefore, we can’t predict how this will affect them.
So will house prices fall in 2023?
In short: No, we don’t know if they will or won’t. This is speculation, not fact. However, we can predict that house prices will decrease by 1.1% in 2023.
