One of the key ways in which the resilience of the UK economy is often measured is the average cost of purchasing a house.
If house prices are lower, then overall wealth is also lower, because houses are one of the main ways in which wealth manifests itself.
This also means that spending is often lower when house prices fall, which can also lead to negative economic consequences.
As such, it’s important for economists and interested parties to keep track of whether or not house prices are currently healthy.
In recent weeks, there’s been some discussion surrounding whether or not the UK housing market is about to crash, precipitated by a fall that was reported earlier this year.
So, is the UK housing market about to crash? Let’s take a look at some of the expert opinions out there about whether a UK house price crash is on the way.
The market seems to be stable
According to The Guardian’s economics editor Larry Elliott, the housing market appears to be proving resilient for now, which means that he believes a crash is unlikely.
Although Elliott points out that house prices have fallen for four months in a row, he also suggests that a 2.4% yearly fall in house prices doesn’t necessarily mean a crash.
He says that it’s worth pointing out the typical property still retains more than £45,000 more value than prior to the pandemic, and that in the past six months, house prices haven’t changed much at all.
Elliott says that the falling house prices we’re experiencing right now are more down to a “slow puncture” effect, wherein a fall that began months ago is still in effect.
As such, further falls may well be likely, but that doesn’t mean we’re in the midst of a house price crash, and Elliott doesn’t seem to think there’s much reason to worry on this front.
House prices are “volatile”
Some, however, are still concerned about the state of the UK housing market in 2023.
Writing in the Times Money Mentor section, Hannah Smith points out that Zoopla, a property website, has forecast that house prices will fall by 5% across 2023, and that demand for houses fell by 18% in May and June 2023.
UK bank Nationwide also showed the largest annual UK housing price drop in fourteen years in July, contributing to a consensus among UK banks and property sites that housing prices are going down.
It’s worth noting that this isn’t something Elliott from the Guardian is disputing; rather, he thinks that this won’t lead to an overall crash, although he does admit that house prices are dropping.
Some believe a crash is already happening
If you take GB News’ Richard Jeffries at his word, then a major house price crash is already happening.
Jeffries cites “leading expert” Rob Dix from The Property Hub as his source; Dix says that we are already enduring “one of the most significant price drops in decades”.
He goes on to say that this is “just the start” of another 10% to 15% drop, which could be on the way soon.
According to Dix, the value of the pound is falling, and because of that, house prices in the UK have fallen by 12.5% in real terms, putting house prices “back to where they were in 2014”.
We can’t know for sure what’s happening
As pointed out by property website Purple Bricks, it’s impossible to predict with any kind of certainty what’s going to happen to the UK housing market.
The market, like many other markets, is volatile, and prone to changes based on sudden shifts in economic policy, for instance, or an external factor that is beyond the control of anyone currently invested in said market.
Purple Bricks also points out that a housing price crash, despite having a deleterious effect on the economy, can also have a positive effect.
While job losses and economic uncertainty often result from house price crashes, there’s also a chance that first-time buyers will find it easier to get onto the property ladder if house prices crash, so it’s not all bad news.
Why could the housing market crash?
Some experts are predicting a crash for the housing market because of the ongoing cost of living crisis.
Many families are struggling to make ends meet thanks to soaring food bills, and energy bills, while they’re falling slightly, are still much higher than they were two to three years ago.
As a result, it’ll be more difficult for buyers to purchase houses, which could result in house prices falling because prospective sellers are unable to sell their properties at the value at which they’d expected to sell.
Previous house price crashes happened due to economic crashes, depressions, and downturns, and we could well see another crash like that in 2023.
Conclusion
Despite some experts’ gloomy predictions (and, indeed, others’ more optimistic outlooks), we simply can’t know for sure whether or not there will be a UK house price crash in 2023.
It’s worth staying informed so that you know whether or not your property is going to plummet in value, but be aware that any experts’ predictions are just that: predictions.
They aren’t set in stone, no matter what they’re saying, so don’t set all of your store by a single outlook or analysis. Watch the market carefully and adjust to what’s happening at the moment rather than what might happen at some point in the future.
