One of the biggest questions in the mind of potential buyers and sellers right now – “Is the UK heading towards a property crash?”

There are many factors which determine property prices, for instance, supply and demand, the health of the economy and interest rates all play an important role. Over the last few years we have seen high demand for properties but supply has been low, aligned with lower interest rates which has increased the buying power for borrowers which in turn have led to sharp increases for house prices.

So after years of increased housing prices, could we potentially see a crash in the property market?

To know this, we first need to understand what a “property crash” actually looks like. Most experts define a property crash as when the Housing Price Index, which is a measurement on the movement of house prices in the UK, drops by 10% or more in a 52 week period. When property prices take a slight dip (especially when house prices have been on the rise for a long period of time) this is known as a correction rather than a crash.

According to Housing Price index, data collected in May 2023 shows that house prices decreased in value by 3.4% or £8864.85 in comparison with May 2022.

In my opinion, if we do see a crash one of the most important factors are interest rates. If interest rates continue to rise making borrowing more expensive for millions of people across the country, this is sure to have a damaging effect on the property market. However you have to remember, a correction could be overdue considering house prices rose by 7.4% in 2020 with further growth of 10.8% in 2021 and even further growth for the first six months of 2022.

Personally, I do not believe we will see the property market “crash” but I do expect to see a market correction. However, if interest rates become too high, this could put a further dampener on to house prices. If we do see the market go into a correction, this could create some excellent opportunities for buyers.

Do you think we will see a property market crash by the end of 2023?