Lloyds Banking Group, the UK’s largest mortgage provider, forecasts a downward trend in house prices, suggesting that this decline will persist throughout this year and 2024. The banking conglomerate, which encompasses Halifax and Bank of Scotland, anticipates a price decrease of 5% by the end of 2023 and an additional drop of 2.4% the following year.

These projections indicate an overall dip of 11% in property prices from their apex in the previous year.

Contrastingly, Santander anticipates a more significant fall of around 7% in house prices for the entirety of 2023, followed by a 2% drop in 2024. Lloyds, the parent company of Halifax, expects prices to slide by 4.7% this year and experience an additional 2.4% decrease in 2024 before a turnaround.

One of the primary reasons attributed to the housing market’s deceleration is the escalation in borrowing costs, which has directly impacted house sales.

Despite the current trends, both banking entities are optimistic about the future. They believe the property market will begin to show positive growth signs by 2025. Lloyds’ team of economists predicts a 2.3% growth in house prices in 2025, while Santander forecasts a 2% upswing.

Lloyds’ chief financial officer, William Chalmers, commented on the situation: “The housing market in 2023 has been a little bit softer than we saw in previous years. Having said that, as you know, there has been an increase generally in the housing market for a number of years to date, and so we’re retracing a part of those steps.”

This cautious optimism from leading financial institutions serves as an important perspective for landlords and homeowners, highlighting the cyclical nature of the property market.