ER advisers expect house prices to continue to fall in 2023

High interest rates and the cost-of-living crisis among the top reasons given

ER advisers expect house prices to continue to fall in 2023

The majority of equity release advisers predict that house prices will continue to fall in 2023, new research from Canada Life has shown.

Six in 10, or 62%, of equity release advisers expect a decline in house prices this year, with almost a third, or 31%, of advisers surveyed anticipating that they could fall between 5% and 10%, indicating potential further disruption for the housing market.

Reasons owed to the predicted decline include high interest rates (44%), concerns around the cost-of-living impacting plans (33%), and an already inflated property market (30%).

The findings also showed that equity release advisers’ opinions are split on the potential for the equity release market, with over four in 10, or 43%, of advisers believing the market will grow in 2023, while a further 40% think it will shrink.

Outlook is also divided as to when the market will return to pre-Q4 2022 levels. Total lending in Q3 2022 reached £1.71 billion, decreasing by 17% to £1.36 billion in Q4 2022 due to the political and economic uncertainty. Six in 10, or 61%, believe it will return to pre-Q4 2022 levels in 2023, albeit 33% say that it will not be before Q3, while the remainder believe it will be 2024 or beyond.

“It’s clear that the current economic climate isn’t helping consumer confidence and that is being felt across the housing market,” Alice Watson (pictured), head of marketing communications at Canada Life UK, commented. “Advisers are predicting a return to previous equity release transaction levels later this year, or into 2024, with a shift to younger borrowers with smaller loan values.

“The equity release market has weathered previous economic headwinds and provided financial resilience to households across the country. With the right advice, it can offer very flexible ways to meet individual customer needs and will no doubt continue to adapt.”

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