UK's largest mortgage lender is anticipating house price fluctuations. Halifax-owner Lloyds Banking Group foresees a 4.7% decline in house prices this year and a further 2.4% drop in 2024 before an eventual recovery.
Increased borrowing costs have resulted in a deceleration in house sales, despite the average house price remaining substantially higher—around £40,000 more than the peak of the COVID-19 period when remote working fuelled demand for larger spaces.
Lloyds predicts a short-term decline in prices over the next two years but anticipates modest long-term growth, with prices forecasted to rise by 0.6% by 2027. The current interest rates, standing at 5.25%, the highest in 15 years due to measures aimed at curbing rising consumer prices, have led to increased borrowing rates, including mortgages, which now average at 6.24% for two-year fixed-rate mortgages.
Lloyds' projections are based on the Halifax House Price Index, which excludes cash buyer figures, constituting over 30% of housing sales. Despite indications of price declines in mortgage lender data, the average property price in the UK remains relatively high.