HOMEOWNERS need to accept that 2023 will become “the year of the price drop”, a leading property expert said today.

Figures out this week revealed prices fell by 2.3% in November, marking the biggest monthly drop since the beginning of the financial crash in 2008.

The fall is the third in a row, and means that since October the average house price has fallen by over £7,000.

Commenting on what lies ahead next year, Jonathan Rolande, from the National Association of Property Buyers, continued: “For 12 years the market has proven doom-mongers wrong, climbing ever higher despite political strife, a pandemic, Brexit and even a European war. But given the current circumstances, it is becoming increasingly hard to see hope for the next year. In fact it’s even becoming tougher to remain on the fence with a ‘something will turn up’ approach. It now seems clear that 2023 will be the year of the property price drop. It’s not a matter of if, but when, how fast, and by how much.

To date we have been seeing relatively small reductions announced by the leading mortgage lenders, no more than around 1% in a month. But that is almost certainly going to accelerate as the full effects of the recent hike in interest rates combined with the normal seasonal slowdown bite.

On how far prices might fall he added: “The first quarter of 2023 will be crucial. If there is a New Year bounce, buyer and lender confidence could hold and the rate of decline will be slow. But if 2023 doesn’t start with a property buying spree, that confidence will be further eroded and that could well spell monthly reductions throughout the whole of next year.”

In October the average house price was £292,406, last month it was £285,579. The annual rate of house price growth slowed to 4.7%, from 8.2% in October, Halifax said. Wales and the South West of England have recorded particularly sharp slowdowns in annual house price growth.

And Mr Rolande said the impact could likely extend into the rental sector too.

He said: “It’s a very strange market out there at the moment. What we’re seeing is a kind of perfect storm for the property market. And surprisingly, it’s to do with rental and sales prices because, of course, they’re very closely intertwined.
“Landlords keep an eye on property prices, not just the rent that they’re receiving, but also the amount that their property value is going up or down, and actually that’s where most landlords make their money.
“It’s not from the £100 pounds profit a month that they might be getting on the rent. It’s actually from the capital growth.
“If that starts to disappear, and not grow, or worse, be eroded even further, they’re going to be quitting the market, putting the market means there’s a smaller supply of property. And that will lead to an increase in rents.”