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Antony Antoniou – Luxury Property Expert

UK Housing Market Faces Double-Digit Decline with Bleak Prospects for a Rebound

UK Housing Market Faces Double-Digit Decline with Bleak Prospects for a Rebound


The UK housing market has been the subject of much speculation in recent times, with economists sounding warning bells about its future prospects. According to experts, the slump in house prices is far from over, and the chances of a robust recovery are slim. This unsettling forecast stems from persistently higher interest rates that are expected to plague the market for the foreseeable future. In this blog post, we delve into the predictions made by S&P Global Ratings and Moody’s regarding the UK’s housing market and explore the reasons behind the gloomy outlook.

S&P Global Ratings Forecasts a 12% Plunge:

S&P Global Ratings paints a somber picture of the UK housing market, predicting a significant drop of 12% in the average value of a UK home from peak-to-trough by the end of 2024. The ratings agency has expressed little optimism for a strong recovery, citing the continuous burden of higher real costs of borrowing for mortgage holders and potential buyers.

The Projections:

The anticipated decline is expected to unfold gradually over the next few years. S&P forecasts a 6.6% decrease in house prices for 2023, followed by an additional 4.9% drop in the subsequent year. Beyond that, the market is likely to stagnate, with only marginal growth rates of 1.4% and 3% predicted for 2025 and 2026, respectively.

The Looming Pain of Rate Rises:

The impending consequences of rising interest rates have yet to fully manifest, with S&P warning that the pressure will intensify further. Homeowners on fixed-rate deals will bear the brunt of this financial burden as they come to the end of their agreements. S&P’s senior economist, Boris Glass, emphasized that the worst of the mortgage pain is yet to come, and there is still some time before reaching its peak.

No Respite in Sight:

Even if interest rates were to decrease after 2024, Moody’s, another leading financial services company, opines that homeowners are unlikely to find much relief. Moody’s forecasts a 10% decline in UK house prices until the end of 2024, attributing the drop to surging mortgage rates that will challenge housing affordability. The UK property sector, unfortunately, is projected to be the worst performer among big developed economies.

The Role of the Bank of England:

Moody’s anticipates that the Bank of England will maintain a tight monetary policy stance through 2024 in response to stubbornly high inflation. This policy, while aiming to bring inflation down, is also expected to exacerbate the impact of interest rates on housing demand, leading to a prolonged downturn in the market.

Fixed-Rate Mortgages Add Complexity:

Over 90% of all UK mortgage holders are on fixed deals spanning between two and five years. While these homeowners have yet to experience the full force of the interest rate surge due to the duration of their loans, over 1 million of them will have to renew their loans in the latter half of this year, potentially adding further strain to an already delicate market.


– UK housing market faces a double-digit decline in house prices, with little prospect of a rebound.
– Economists warn that higher interest rates will persist, hindering any recovery.
– S&P Global Ratings predicts a 12% fall in average UK home values by the end of 2024.
– Projected decline: 6.6% in 2023, 4.9% in 2024, with stagnant growth in 2025 and 2026 (1.4% and 3% respectively).
– The impact of rising interest rates on fixed-rate mortgages will intensify, causing more financial strain for homeowners.
– Moody’s also forecasts a 10% house price drop until 2024, making the UK property sector the worst among developed economies.
– The Bank of England is expected to maintain a tight monetary policy, prolonging the market’s downturn.
– Over 90% of UK mortgage holders are on fixed deals, but over 1 million will need to renew their loans in the latter half of the year.


The UK housing market is bracing itself for an extended period of decline, with both S&P Global Ratings and Moody’s predicting double-digit drops in house prices. The sustained pressure of higher interest rates is set to impede any swift recovery, leaving homeowners and potential buyers grappling with elevated borrowing costs. As the Bank of England grapples with inflation, the future of the UK property sector remains uncertain and challenging.

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