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House prices set to fall 5% next year says Zoopla as price inflation falls to 7.8%

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House prices set to fall 5% next year says Zoopla: Price inflation falls to 7.8% in October driven down by a sharp increase in mortgage rates

  • Mortgage rates should fall back to 4-5% next year says the property website
  • Average discount on asking prices has grown to 3%
  • Demand fell 44% following the mini-Budget on 23 September 
  • Buyers are using rapid price inflation over the past two years to negotiate down 

House prices rose by 7.8 per cent in October, according to Zoopla’s latest house price index as the property site predicts they will fall by 5 per cent next year.

It represents a slowing of growth compared to last month, when Zoopla reported that house prices had increased by 8.1 per cent in the year to date.

Quarterly house price growth has slowed to 0.7 per cent in November, the lowest rate since February 2020. 

However, despite a clear change in market sentiment none of the major cities or regions have recorded price falls over the last three months.

Slowing: House price growth across the UK fell to 7.8% in October according to Zoopla

Slowing: House price growth across the UK fell to 7.8% in October according to Zoopla

Price growth has been impacted by September’s ill-fated mini-Budget, which saw mortgage rates rise sharply as the cost of borrowing increased due to a sell-off of Government bonds – known as gilts.

Since then the market has been in an almost constant state of flux. In October the average two-year and five-year fixed mortgage rates hit recent peaks of 6.65 per cent and 6.51 per cent respectively.

And while rates are now steadily falling buyer demand has dropped by 44 per cent following the fiscal statement.

>> Check the best mortgage rates for your circumstances with our mortgage finder powered by London & Country – and figure out what you’ll actually be paying by using our new and improved mortgage calculator 

‘There is a really big trend of wait and see at the moment,’ says Matt Coulson, mortgage adviser at Heron Financial. ‘What you tend to find is that with the purchase market, as soon as you hit 1 December it does cool off and I think we have seen that a month earlier this year.’ 

New sales have also fallen, according to Zoopla, dropping 28 per cent compared to the same time last year driven predominantly by the rise in mortgage rates.

Its outlook for 2023 assumes mortgage rates will fall back to 4-5% leading to a 5 per cent drop in house prices.

This means that 5-year fixed mortgage rates are likely to start 2023 at or just below 5 per cent, a much better position for the housing market outlook than today’s rates of more than 6 per cent.

Yet compared to where rates were last year and earlier in 2022 it still represents a material increase in buying costs for the 7 in 10 households that are using mortgages.

Down: Buyer demand has dropped by 44% following September's mini-Budget

Down: Buyer demand has dropped by 44% following September’s mini-Budget

House price falls: What are the forecasts? 

Zoopla’s house price prediction is softer than the estimations of some others. 

According to the Office of Budget Responsibility, house prices will fall by around 9 per cent between the end of this year and September 2024. The change, it says, will be driven by rising mortgage rates and tougher economic conditions.

Other analysts have previously predicted falls of up to 30 per cent in the next two years.  

Price falls mean sellers are less likely to achieve the asking price for their properties. 

The strength of the post-pandemic market resulted in buyers having to pay, on average, 100 per cent of the asking price or higher on some occasions for much of the past two years.

The average discount required to achieve a sale has widened to 3 per cent in recent weeks.

Zoopla expects average discounts to extend further as ‘we move to more of a buyers’ market’.

Richard Donnell, executive director of research at Zoopla, said, ‘We still expect house price falls of up to 5 per cent in 2023 with 1 million sales and mortgage rates dipping below 5 per cent. 

‘But the number of sales going through will remain buoyant for a range of structural, demographic and economic factors.’

The analysis notes that strong house price growth has given buyers more room to negotiate on asking price. The prospects for 2023 will depend on how willing sellers are to adjust asking prices in line with what buyers are prepared to pay. 

Zoopla added: ‘We do not see any evidence of forced sales or the need for a large, double digit reset in UK house prices in 2023’

At the same time the fall in demand and sales, as well as more homes coming to the market, mean that the stock of homes for sale continues grow albeit off a low base. Last month the average estate agency office had 23 homes for sale. 

This is the highest since January 2021 but almost a fifth lower than pre-pandemic levels.

What to do if you need a mortgage 

Borrowers who need to find a mortgage because their current fixed rate deal is coming to an end, or because they have agreed a house purchase, have been urged to act but not to panic.

Banks and building societies are still lending and mortgages are still on offer with applications being accepted. 

Rates are changing rapidly, however, and there is no guarantee that deals will last and not be replaced with mortgages charging higher rates. 

This is Money’s best mortgage rates calculator powered by L&C can show you deals that match your mortgage and property value

What if I need to remortgage? 

Borrowers should compare rates and speak to a mortgage broker and be prepared to act to secure a rate. 

Anyone with a fixed rate deal ending within the next six to nine months, should look into how much it would cost them to remortgage now – and consider locking into a new deal. 

Most mortgage deals allow fees to be added the loan and they are then only charged when it is taken out. By doing this, borrowers can secure a rate without paying expensive arrangement fees.

What if I am buying a home? 

Those with home purchases agreed should also aim to secure rates as soon as possible, so they know exactly what their monthly payments will be. 

Home buyers should beware overstretching themselves and be prepared for the possibility that house prices may fall from their current high levels, due to  higher mortgage rates limiting people’s borrowing ability.

How to compare mortgage costs 

The best way to compare mortgage costs and find the right deal for you is to speak to a good broker.

You can use our best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs.

Be aware that rates can change quickly, however, and so the advice is that if you need a mortgage to compare rates and then speak to a broker as soon as possible, so they can help you find the right mortgage for you.

> Check the best fixed rate mortgages you could apply for 

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‘Britain’s shortest house’ measuring just 6ft 5ins tall which ‘dates back to 1758’ goes to auction

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Room for a little one! ‘Britain’s shortest house’ measuring just 6ft 5ins tall which ‘dates back to 1758’ goes to auction with £70,000 guide price

  • ‘Britain’s shortest house’ is just 6ft 5ins tall and is on the market for only £70K
  • The unique property is found in the village of Newton Poppleford near Sidmouth

‘Britain’s shortest house’ standing at just 6ft 5ins tall has gone on sale – for the relatively small price of £70,000.

The unique property, with ceilings that may skim the tops of some heads, is found in the village of Newton Poppleford near Sidmouth, Devon.

As its name implies, Ye Olde Toll House is a former toll house, which is believed to date back to 1758.

Its yellow exterior is topped off with a thatched roof, covering walls which stand no higher than an average front door.

Despite its miniature size the interior houses an entrance porch, living room, small kitchen, a shower room and one bedroom.

The unique property, with ceilings that may skim the tops of some heads, is found in the village of Newton Poppleford near Sidmouth, Devon

The unique property, with ceilings that may skim the tops of some heads, is found in the village of Newton Poppleford near Sidmouth, Devon

The unique 6ft 5ins property, that may skim the tops of some heads, is found in the village of Newton Poppleford near Sidmouth, Devon

The unique 6ft 5ins property, that may skim the tops of some heads, is found in the village of Newton Poppleford near Sidmouth, Devon

On the listing, Clive Emson Land and Property Auctioneers described the property as: 'A charming detached thatched Toll House for updating'

On the listing, Clive Emson Land and Property Auctioneers described the property as: ‘A charming detached thatched Toll House for updating’

There’s also an outdoor space with a log store area and attic space for extra storage.

On the listing, Clive Emson Land and Property Auctioneers described the property as: ‘A charming detached thatched Toll House for updating.

‘This unique single storey property is believed to date back to 1758 and is situated in the popular East Devon village of Newton Poppleford, which is only four miles from the popular seaside town of Sidmouth.

‘The property is likely to be of interest to a home owner or those looking for a lock-up and leave bolt hole. It could also be of interest to investment purchasers.’

Bidding for the property currently sits at £70k.

You can join the auction here.

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That’s potty! Grade II Listed cottage on sale is mocked for having a toilet in a children’ bedroom

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A Grade II listed cottage on sale for £450,000 has been mocked for having a toilet in the middle of one of the bedrooms.

The detached historic home in Colne, near Burnley, Lancashire, boasts a wealth of original features including mullion windows, inglenook stone fireplace and stone stills. 

But home hunters have been scratching their heads at the design choice of a loo and sink in what appears to be a child’s bedroom. 

The toilet has also been adorned with a large sticker featuring Marvel Comic character, Hulk, matching a small novelty Marvel laundry bin to its side.

Bemused Marie Gardiner said: ‘My friend sent me this from Rightmove and it’s freaking me out.

The toilet has also been adorned with a large sticker featuring Marvel Comic character, Hulk, matching a small novelty Marvel laundry bin to its side

The toilet has also been adorned with a large sticker featuring Marvel Comic character, Hulk, matching a small novelty Marvel laundry bin to its side

‘Somehow the layout is wrong in every room. Kid’s bedroom is also a toilet.’

Lydia Jane said: ‘That’s an OCD nightmare. Who builds a shower cubicle in front of a bedroom window?’

Marie added: ‘I thought it was maybe a stand up tanning thing?!

To which Lydia replied: ‘Might be, but still.’

It is listed in the property description which reads: ‘One of the bedrooms is separate to the others which is accessed via the spiral staircase and has a WC and wash basin.’

The quaint home features a large modern, living room diner and kitchen with a range oven and has a homely feel.

Three of the bedrooms are located in the main building with the fourth in an annex.

Other interesting features include what appears to be a stand up tanning booth in one of the other bedrooms, and wooden animals in the garden.

Other interesting features include what appears to be a stand up tanning booth in one of the other bedrooms

Other interesting features include what appears to be a stand up tanning booth in one of the other bedrooms

The key features include it being in a ‘sought after location,’ having a ‘fully fitted modern kitchen,’ ‘three bedrooms’ and ‘large private gardens.’

It is on the market with Petty Real Estate Agents and being advertised on Rightmove.

The property listing reads: ‘Beautiful three bedroom semi detached Grade II Listed cottage situated in a highly sought after semi rural location near to the amenities offered by Colne town centre.

‘This historic building which formed part of the old Carry Bridge Hall has a wealth of original features throughout such as, mullion windows, inglenook stone fireplace and stone stills.

‘The property comprises an entrance hallway with storage cupboard, spacious lounge diner with original stone flagged floor, inglenook stone fireplace with multifuel stove, spiral staircase and patio doors leading to the garden.

‘Fully fitted kitchen which houses a range of modern matching wall, base and drawer units, contrasting granite work surfaces, range oven, dishwasher and stairs leading to the first floor.

‘To the first floor is a landing there are three double bedrooms.

The 'beautiful three bedroom semi detached Grade II Listed cottage' has three of the bedrooms located in the main building with the fourth in an annex

The ‘beautiful three bedroom semi detached Grade II Listed cottage’ has three of the bedrooms located in the main building with the fourth in an annex

Th property listing boasts of a 'spacious lounge diner with original stone flagged floor, inglenook stone fireplace' and a spiral staircase

Th property listing boasts of a ‘spacious lounge diner with original stone flagged floor, inglenook stone fireplace’ and a spiral staircase

The quaint home features a large modern, living room diner with a prial staircase which can be used to access some of the bedrooms

 The quaint home features a large modern, living room diner with a prial staircase which can be used to access some of the bedrooms

The three piece family bathroom has a 'contemporary suite which includes a bath with shower over, low level WC and wash basin and is fully tiled throughout'

The three piece family bathroom has a ‘contemporary suite which includes a bath with shower over, low level WC and wash basin and is fully tiled throughout’

Petty Real Estate Agents, with whom the property is up on the market,  described how the property's kitchen 'has a homely feel'

Petty Real Estate Agents, with whom the property is up on the market,  described how the property’s kitchen ‘has a homely feel’

Original features in this historic home near Burnley, Lancashire include mullion windows

Original features in this historic home near Burnley, Lancashire include mullion windows

The four-bedroom home in the 'sought after location' has patio doors leading to the garden

The four-bedroom home in the ‘sought after location’ has patio doors leading to the garden

The 'fully fitted kitchen' features a 'modern matching wall, base and drawer units, contrasting granite work surfaces, range oven, dishwasher and stairs leading to the first floor'

The ‘fully fitted kitchen’ features a ‘modern matching wall, base and drawer units, contrasting granite work surfaces, range oven, dishwasher and stairs leading to the first floor’

There is a large private garden area to the rear which is 'mainly laid to the lawn'

There is a large private garden area to the rear which is ‘mainly laid to the lawn’ 

‘One of the bedrooms is separate two the others which is accessed via the spiral staircase and has a WC and wash basin.

‘Three piece family bathroom has a contemporary suite which includes a bath with shower over, low level WC and wash basin and is fully tiled throughout.

‘Detached annex with lounge & fully fitted kitchen, three piece shower room and double bedroom.

‘Externally there is a driveway leading to a courtyard where there is parking for several vehicles and a detached garage which has power and lighting.

‘The owners have created a woodland activity area which is perfect for your young children. There is a large private garden area to the rear which is mainly laid to the lawn.’

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‘Time capsule’ country house which has been left untouched for decades on sale for £1.65million

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A ‘time capsule’ country house left untouched for decades has gone on the market for £1.65m with 25 acres of overgrown grounds included. 

Burnells Estate on Exmoor National Park is nearly a century old but has not been lived in for at least 20 years as the current owner, who lives abroad, bought it to use as a retirement home and never got round to it. 

Estate agents Webbers have cleared the terrace around the outdoor swimming pool to show buyers the potential it has.

The house also has hunting rights over a neighbouring 81 acres of woodland and stunning countryside views of surrounding Exmoor.

Burnells estate was first built in 1927 for Lord Christopher Thomson, a British Army officer and later Labour minister and peer. 

The overgrown Burnells Estate on Exmoor National Park is on sale for a cool £1.65m

The overgrown Burnells Estate on Exmoor National Park is on sale for a cool £1.65m

The house was first built in the 1927s for Lord Christopher Thomson, a British Army officer and later Labour minister and peer

The house was first built in the 1927s for Lord Christopher Thomson, a British Army officer and later Labour minister and peer

The house in its former glory is quite the sight
It hasn't been lived in for over 20 years

The house has been left to decay for 20 years and is now overgrown and in need of renovation

He served in the Second Boer War and the First World War before going into politics.

Thomson was Secretary of State for Air under Ramsey MacDonald, who made him Baron Thomson in 1924. 

He died in the R101 airship crash on its maiden flight from Britain to France in 1930.

The accident was partly down to Lord Thomson putting pressure on to make the maiden flight before safety checks were complete and adequate flight testing had been done.

It led to the deaths of 48 people and the cancellation of the British airship programme by Thomson’s successor.

The house has an incredible private setting in the countryside, down a country lane between the villages of Dunster and Wootton Courtenay in Somerset.

The house has over 4,000 sq ft of living space with a large entrance hall, kitchen, breakfast room, dining room and a large L-shaped sitting room on the ground floor and eight bedrooms and three bathrooms on the first floor.

It has plenty of original features including exposed ceiling beams, ornate plasterwork and original fireplaces. 

The kitchen has an oil-fired Aga and adjoining butler’s pantry with original full-height crockery and storage cupboards.

There is also a large garage with a studio above.

The kitchen is spacious, airy and comes equipped with an AGA for clean country living

The kitchen is spacious, airy and comes equipped with an AGA for clean country living 

The inside of the house could use some work but has enough period features to fall in love with

The inside of the house could use some work but has enough period features to fall in love with 

The entertainment room has a large authentic log fire - perfect for winter nights

The entertainment room has a large authentic log fire – perfect for winter nights 

Outside the property has a number of slate terraces that would have originally made up the formal gardens and there is a sunken swimming pool from the house’s heyday. 

The grounds include mixed woodland, heathland and paddocks.

Mark Curran, from Webbers, said: ‘The house has not been occupied for at least 20 years and is a time capsule from the era of art deco.

‘The woodland and foliage has grown up around the property and offers people the possibility of a virtual blank canvas for their own preference and ideas.

‘The interior of the house could be remodelled to suit more modern tastes or enlarged.’

The property, which is in a national park, has nearly 25 acres of grounds

The property, which is in a national park, has nearly 25 acres of grounds

The house has hunting rights over a neighbouring 81 acres of woodland and stunning countryside views of Exmoor National Park

The house has hunting rights over a neighbouring 81 acres of woodland and stunning countryside views of Exmoor National Park

The owner Robert Berg said: ‘I was over in the UK for business and staying in a hotel that I really disliked, so I asked my accountant to help me find a home for when I was here.

‘I purchased the property back in 1979 and lived there permanently until 1983. I’ve used it as my holiday home ever since, until personal circumstances changed for me in recent years.

‘Unfortunately, I have not been back as often as I would have liked, so I think the time is right for me to move on and let new owners breathe life back into it. It is in need of renovation but I know it will make a truly unique home.

‘This is not a normal house; it must have been a very expensive project when it was built and it was constructed in the most perfect manner set over five slate terraces.

‘There is a swimming pool on the second terrace that is a wonderful luxury. Surrounded by woodland and beautiful trees, it offers a most welcome escape from the stresses of day-to-day life.

‘Views from the house are far reaching over scenic countryside that changes with the passing seasons.

‘Access to the property is via a private road which is about 500m long and not many people know that it’s here unless they are coming to visit.

‘I have loved my time living here, it’s been a really wonderful house, and I wish the new owners all the very best.’

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