Cost of living - latest updates: UK house prices expected to fall sharply; the energy bill drops by hundreds (2023)

Central points
  • Energy bills will drop by more than £400 from tomorrow
  • But suppliers warn about winter prices
  • House prices fell 3.5% - with a big drop predicted over the next year
  • Tesco lowers the price of 500 basic products
  • Brits give pets 'humane medicine' to avoid vet bills
  • Milk Milk locked| Send us any unusual security measures you've seen
  • Everything you need to know before the energy price cap changes this weekend
  • This dilemma:Can my home loan offer be withdrawn?
  • Budget mom:Finding cheap gas|Electric cars|Save for your children|Do food subscriptions save money?|Holiday expenses
  • Live coverage by Brad Young

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Savings bank to increase customers' chances of winning through Premium bonds

Savers who have Premium Bond accounts with NS&I will have the best chance of winning a prize for 15 years.

From next month, the premium pool will rise to 4% from 3.70% - the highest level since 2007.

Exchange rates on each £1 bond will therefore rise from 24,000 to 1 to 22,000 to 1.

The changes will mean an extra £30m added to the prize pool, with an estimated 460,000 extra prizes up for grabs, NS&I said.

The bank also raised interest rates on variable products.

On its Direct Saver and Income Bonds, the interest rate rises from 2.85% to 3.40%.


To turn carbon dioxide into rock

In this edition of the Business Podcast,Emma Crosby, who replaces Ian King, joins the chief economist as revised GDP figures show weak growth for the first quarter of this year.

In addition, he talks to the head of Landsdækdende, as the housing association warns that continued increases in mortgage interest rates threaten to put a "significant drag" on the property market.

And he hears from an Icelandic company that turns carbon dioxide into stone.


Increase in alcohol duty to 'make consumers unhappy'

Brad Young, livereporter

Enjoying a drink in the summer sun could quickly become more expensive as brewers and wineries warn that changes to alcohol duty will increase the price of bottled beer, spirits and wine.

Some brewers are reportedly considering reducing the strength of their beer to avoid costs, while there are fears that some wines could disappear from the shelves altogether.

Duty on alcohol will be frozen on August 1 for the first time since the start of the pandemic, and Chancellor Jeremy Hunt confirmed in March that it will rise in line with inflation.

Taxation on bottled beer and spirits is set to rise by 10%, costing the industry £225m, trade unions have said.

"With business costs set to rise, it is impossible to see how brewers can continue exactly as they are and avoid customers paying more for their beer," said Emma McClarkin, chief executive of the British Beer and Pub Association.

Ending the duty freeze will cost the industry £225m "at an already challenging time", with brewers facing "increasing supply chain price increases" over the past two years, she said.

The challenge for winegrowers could become even greater when considering the introduction of a new same-day alcohol tax calculation system.

Wines will be taxed more the stronger they are, not by liquid volume as in the current system.

This equates to an extra 10% increase in costs, so when the end of the customs freeze is taken into account, the average 75cl bottle of 12.5abv wine will be taxed 20% more, according to Simon Stannard, policy director at Wine and Spirit Trade association.

"An increase in alcohol duty will only fuel inflation further. It will put more misery on consumers. And it will hurt British business, particularly those in the hospitality supply chain, which are still trying to recover from the pandemic," he said.

The alcohol level in wine cannot be reduced in the same way as beer, he said, because it changes the product.

Wine from warmer countries, which naturally produce stronger wines, will be "punished the most," he said.

The sued pub products will not suffer the same fate thanks to a government scheme which promises to make their charges up to 11p cheaper than bottled or canned products.

The Ministry of Finance has been contacted for comment.


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It calls for the abolition of permanent charges and an increase in unit prices

Fixed charges on electricity bills should be abolished or reduced, sector bosses said.

The system penalizes those who try to keep their energy bills under control, the boss of British Gas owner Centrica said.

A fixed charge is a fixed amount that people pay regardless of consumption and finances the maintenance of the electricity and gas network.

"The fixed charge hits energy-conscious people the hardest - often people from low-income households and metered users," Centric chief executive Chris O'Shea told the Sun newspaper.

Greg Jackson, chief executive of rival Octopus Energy, agreed and called for raising unit prices instead.

"The ongoing fees are too high," he tweeted.

"Costs should be moved to unit pricing with additional support for low income/disability users."

If that happens, some poorer people, such as those with large families or in poorly insulated homes that need more energy, could see their bills rise.


Energy prices - what happens then?

Business Correspondent Paul Kelsoexplains how the new energy price cap will affect British families - and how prices will change in the coming months.

13:02:48 sati

Tesco lowers the price of 500 basic products

Fruit, vegetables, rice and tuna are among the products whose prices are falling, while control at retailers is increasing.

With food inflation at 18.4%, supermarket bosses rejected claims of profiteering when they appeared before a committee of MPs earlier this week.

Today, Tesco announced that it will cut the cost of everyday items by an average of 13%.

Pasta will be reduced by 5p and a four-litre bottle of milk will drop by 10p to £1.45.

Sainsbury's and Aldi have also confirmed the fall in milk prices, which has led to massive inflation in the past year.

Tesco head of product Ashwin Prasad said: “We know that more than ever our customers are looking for great value and this big round of price cuts on 500 key household items will help their budgets go that little bit further.

"We will continue to work closely with our suppliers to pass on price reductions to our customers when we can."


Home sales fall 27% due to "mortgage upheaval"

Earlier today we reported a 3.5% drop in home prices, with further declines forecast, in part as sellers struggle to sell their homes at asking price while buyers face rising mortgage rates.

New figures released by HMRC show that the number of homes sold in May fell by 27% compared to last year.

The lack of transactions is a "more accurate" reflection of market health than house prices, according to Jeremy Leaf, a north London estate agent and former housing president of the Royal Institution of Chartered Surveyors.

"Mortgage disruptions and inflation concerns meant fewer buyers and longer negotiations, resulting in fewer transactions," he said.

Those who need to move will do so regardless, but sellers must "price realistically" to attract other buyers in the coming months, said Jason Tebb, CEO of real estate search website

"With the possibility of further rate hikes and lenders pulling their mortgages and raising rates again, borrowers are likely to be concerned about affordability," he said.

In the UK, 80,020 transactions were recorded last month, which is 3% less than in April.

A caveat to the headline is that there were more public holidays in May 2023 than in the same month last year.


Brits give pets 'humane medicine' to avoid vet bills

Britons are "putting their pets' lives at risk" by posing as do-it-yourself doctors to avoid vet bills, research has found.

More than one in three self-diagnose pets or give them humane medication, according to a report by Snoots Vet.

At the same time, they found that 55% of people saw an increase in their pet insurance and the average cost of a vet bill reached £572.

Around a quarter of pet owners are putting off a trip to the vet to see if their animal will recover and more than 40% have missed vaccinations due to the cost of living crisis.

"Pets are part of our family, but UK pet owners are putting the lives of their furry family members at risk to save costs, which can ultimately lead to more expensive treatment costs," said Snoots Vet founder, Jonathan Moyal.


John Lewis unveils plans to build first of 10,000 homes

The retailer may be best known for its home and fashion products, but it has just handed in plans to build almost 1,000 homes in London and Reading.

Aimed at key workers such as nurses and teachers, they are furnished with John Lewis furniture and served by Waitrose stores and cafes.

The company said it is moving into the market as private landlords move to meet demand for rental properties.

In December, John Lewis unveiled a £500m deal with investment giant Abrden after it said it wanted to build 10,000 homes over the next decade.

The plans submitted today will see 428 homes built in West Ealing and 353 in Bromley.

Later this year, John Lewis wants to convert an empty warehouse in Reading into property.

More than a third of the homes built will be affordable, JLP said, although it did not specify what the rental costs would be.


Will UK house prices fall in 2023? ›

The Office for Budget Responsibility has projected that prices will fall by 9% between 2022 and 2024, before starting to rise again throughout 2025. In November 2022, property website Zoopla said it expected prices to fall by 5% in 2023.

What will happen to mortgage rates in 2023 UK? ›

How much have UK mortgage rates gone up?
DateAverage 2-year fixed rateAverage 5-year fixed rate
16 more rows

Will UK house prices keep falling? ›

On average, with significant regional and local variations, I'm expecting prices to fall a total of 35 per cent in nominal terms over approximately three years, from their peak in 2022, to 2025 as the UK goes through its own financial recalibration on the back of global financial events.

Will interest rates go down in 2023? ›

The mortgage interest rate forecast is for rates to stay the same or tick slightly lower in July, with average 30-year rates at 6.67% as of June 22, 2023, compared to 6.57% on May 25, 2023, according to the Freddie Mac Primary Mortage Market Survey (PMMS).

Should I buy a house in 2023 or 2024 UK? ›

This will make monthly mortgage payments more expensive, which could mean 2023 is not a good time to buy a house. However, there is no guarantee that rates won't rise further, so if you are in a position to buy now it could be better to get on the ladder sooner instead of waiting until 2024.

Will house prices go down in 2023 usa? ›

According to the CoreLogic HPI Forecast, home prices are projected to continue their upward trajectory. The forecast indicates an expected month-over-month increase of 0.8% from March 2023 to April 2023 and a year-over-year increase of 4.6% from March 2023 to March 2024.

How high will mortgage rates go in 2024 UK? ›

The current plot graph indicates that UK interest rates could peak at or close to 5.25% within the next six months before falling sharply to around 4.5% by the first quarter of 2024. This is now higher than the implied UK interest rate merely a month earlier, which had originally expected to peak at around 4.5%.

Will mortgage rates go down in 2023 or 2024? ›

Along those lines, organizations like Fannie Mae and the Mortgage Bankers Association forecast that the average rate on 30-year fixed-rate mortgages will decline throughout 2023, continuing into the first quarter of 2024.

Will 30-year mortgage rates drop in 2023? ›

As inflation starts to come down, mortgage rates will recede somewhat as well. If we experience a recession, rates may drop a little faster. But average 30-year fixed rates will likely remain somewhere in the 6% to 7% range throughout 2023.

Will UK house prices fall in next 5 years? ›

The UK house price predictions for the next 5 years (2023-2027) The housing market is predicted to slow down due to the expected base rate rise, resulting in high mortgage rates. As a result, fewer buyers can afford homes, leading to a drop in house prices.

What is the biggest house price drop in the UK? ›

House prices fell by 3.4% year-on-year in May - the biggest annual fall in nearly 14 years, according to one of the UK's biggest mortgage lenders. The drop is the biggest since July 2009, when an annual fall of 6.2% was recorded, Nationwide said.

Will house prices drop in 2024 UK? ›

If inflation rises by, on average, 5% per year for the next two years, we could then expect a 40% decline in nominal house prices from December 2022 (by comparison, the OBR estimates a 10% decline). This would be a fall from £265,200 to £160,000 by the end of 2024 (Chart 6).

What will interest rates be in 2023 2024? ›

Direct Loan Interest Rates for 2023-2024
Loan Type10-Year Treasury Note High YieldFixed Interest Rate
Direct Subsidized Loans and Direct Unsubsidized Loans for Undergraduate Students3.448%5.50%
Direct Unsubsidized Loans for Graduate and Professional Students3.448%7.05%
1 more row
May 16, 2023

How high could interest rates go in 2023? ›

So far in 2023, the Fed raised rates 0.25 percentage points twice. If they hike rates at the May meeting, it is likely to be another 0.25% jump, meaning interest rates will have increased by 0.75% in 2023, up to 5.25%.

How long will interest rates stay high in 2023? ›

“We expect that 30-year mortgage rates will end 2023 at 5.2%,” the organization noted in its forecast commentary. It since has walked back its forecast slightly but still sees rates dipping below 6%, to 5.6%, by the end of the year.

Is it better to buy a house now or wait till 2024? ›

Things may get better sooner than you think: Fannie Mae predicts that 30-year mortgage rates will average 6.3 percent throughout 2023 before falling to 5.7 percent in 2024. While six-tenths of a percentage point might not sound like much, it can make a big difference in how much house you can afford over the long run.

Should I sell my house now or wait until 2024 UK? ›

Future Plans: If you have plans to buy a new home in the near future, it may be better to wait until 2024 to sell your current home. This way, you can take advantage of any market improvements and get a better price for your home, which could help with the down payment and closing costs of your new home.

Is 2023 a good year to buy a house UK? ›

Currently, high inflation and the pressure on household spending is being combined with high mortgage rates, but if mortgage rates drop as expected and become more normal and affordable in 2023, house prices should fall and buyers should return to the market.

What is the best date to close on a house? ›

If you need to be occupying your home by a certain date to save on rent, it's a much better deal to close at the end of the previous month (for example, January 30) instead of the beginning of the current month (February 1).

Will house prices go down in 2024 usa? ›

BENGALURU, May 31 (Reuters) - U.S. home prices will decline less than previously expected this year before stagnating in 2024, despite widespread expectations interest rates will remain higher for longer, according to property analysts polled by Reuters.

Will 2023 be a bad time to buy a house? ›

Based on Zillow's data and CAR's data, the California housing market is expected to experience a slowdown in 2023 and 2024. According to Zillow, the average home value in California is $737,900, down 4.3% over the past year, and homes go pending in around 13 days.

How long will UK mortgage rates stay high? ›

Around 60% of the £15.8bn increase in mortgage payments is still to be passed on to households, which will move on to new higher fixed-rate mortgage deals up to 2026.

Will 2024 be a good year to buy a house UK? ›

The report concludes that despite the consensus forecast being a further small rise in house prices next year, it is expected that they will fall by 3.0% in 2023 and 1.8% in 2024.

How high will UK interest rates go? ›

Consequently, we now anticipate interest rates to peak at 6.5% by the end of 2023, a full 1.5 pp higher than our previous forecast for a peak of 5.0% (see chart 1, below). This is one of the highest forecasts in the market and we anticipate rates at this level will drive the UK economy into a recession.

Where will 30 year mortgage rates be in 2023? ›

McBride expects rates to fall more consistently as the year progresses. "Thirty-year fixed mortgage rates will end the year near 5.25%," he added.

What is the mortgage rate forecast for the next 5 years? ›

ING predicts rates to range from 5% in the second quarter of 2023, rising to 5.5% in the third quarter, and then falling back to 5% in the final quarter of the year. They also predict interest rates ranging between 3% and 4.25% in 2024, staying at 3% by the end of 2025.

How long will rates stay high? ›

“While the Federal Reserve paused on interest rate increases in June, they left the door open for more increases in the coming months as long as inflation remains above the desired rate. Therefore, we expect mortgage rates to stay near their current rate in July 2023 and trend lower as inflation pressures ease.”

Will mortgage rates go down in October 2023? ›

However, the good news for homeowners is that mortgage rates are projected to fall next year, according to Fratantoni. According to MBA, mortgage rates will conclude in 2023 at roughly 5.4%. According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage is currently 6.94%.

How will mortgage rates change in 2024? ›

Economists tell real estate editors to expect some improvement in the housing market in 2024. MBA expects loan rates to average 5.6% by end of 2023. NAR expects rates to average 5.6% in 2024.

Will mortgage rates go up in 2023 and 2024? ›

The Mortgage Bankers Association and the National Association of Realtors join Fannie in predicting a decline in mortgage rates starting in the second half of 2023 and continuing into 2024.

What is the long term trend in house prices in the UK? ›

Main points. Average UK house prices increased by 6.3% in the 12 months to January 2023, down from 9.3% in December 2022.

When was the last property crash UK? ›

The 2008 financial crash

This was a global financial crisis triggered by the collapse of the US housing market. In the UK, house prices fell by around 20% between 2007 and 2009, with many homeowners facing negative equity (when the value of their home is less than the outstanding mortgage).

Will my house be worth less in 5 years? ›

How much will property prices rise in 5 years? Based on historical averages of 3.5% of home value growth per year, property prices will rise a total of about 18 to 20% in 5 years. The math is simple: 3.5% a year for 5 years, compounding annually.

Where in the UK has the lowest house prices? ›

After analysing the data, Rightmove found that Bradford in Yorkshire was Britain's cheapest city to get on the property ladder.

Where in the UK has the highest house prices? ›

Unsurprisingly London dominates most of the list, so the following data has excluded asking prices in the capital.

Where are the most expensive house prices in the UK? ›

The UK's most expensive seaside towns
Seaside locationRegionAverage house price (2022)
SalcombeSouth West£1,244,025.00
SandbanksSouth West£952,692.00
AldeburghEast of England£794,492.00
PadstowSouth West£790,847.00
6 more rows
Apr 6, 2023

Why is the UK housing market not crashing? ›

A major crash has so-far been avoided as buyer demand has increased amid a housing shortage, and rules brought in after the financial crisis have meant homeowners were better prepared for price falls.

How much will the average UK house cost in 2030? ›

The UK as a whole

Our underlying forecasts suggest that property prices will rise 23% by 2020 and 97% by 2030. An averagely priced home costing £280,000 today, would therefore cost around £344,000 five years from now and over half a million in fifteen years' time.

How much will a house cost in 2050 UK? ›

Predictions: 2025-2050

If average house prices continue to rise as they have been doing, by 2025, the average property will cost £251,476. This figure will then tip over the £300,000 mark in 2035, and increase to £392,301 by 2050 – a huge 64% increase in 30 years!

What will interest rates be in 2024 UK? ›

However, financial markets expect the base interest rate to keep climbing. It is forecast to peak between 5.75% and 6% by the start of 2024. How soon after this interest rates will fall will depend on how quickly inflation cools.

Where will mortgage rates be in 2026? ›

Mortgage Interest Rate predictions for May 2026. Maximum interest rate 4.10%, minimum 3.79%. The average for the month 3.98%. The 30-Year Mortgage Rate forecast at the end of the month 3.91%.

Will mortgage rates go down to 3 percent? ›

Returning to mortgage rates of 3% or 4% is not going to happen, in my view,” says Yun, who points out that historically rates have been higher. The low rates of 2020 and 2021 were “unique” and those that got them were “lucky,” he says.

What's a good mortgage rate? ›

A “good” mortgage rate is different for everyone. In today's market, a good rate could be 6% for one borrower and 8% for another on the same day. To understand what a favorable mortgage rate looks like for you, get quotes from a few different lenders and compare them.

Will there be more interest rate hikes in 2023? ›

After voting to leave interest rates unchanged in a target range of 5-5.25 percent, policymakers on the Federal Open Market Committee (FOMC) caught Fed watchers by surprise when they announced that they're also penciling in two more rate hikes for 2023.

How much will house prices be in 2023 in England? ›

Main points. Average UK house prices increased by 4.1% in the 12 months to March 2023, down from 5.8% in February 2023. The average UK house price was £285,000 in March 2023, which is £11,000 higher than 12 months ago, but £8,000 below the recent peak in November 2022.

Will 2023 be a good time to buy a house? › data analysis indicates that July 2023 is a good time to buy a house for first-time home buyers. This article provides an unbiased look at current mortgage rates, housing market conditions, and market sentiment. We highlight why 71 percent of renters would buy a home if their lease ended this month.

How much will my house be worth in 2030 UK? ›

In England, the average price of a home will be £457,433 by 2030. The only areas in the country that would offer an average house price under £280,000 in 2030 would be Merseyside (£275,074), East Riding of Yorkshire (£277,411) and Durham (£279,985).

Is 2023 a good year to move house UK? ›

Whether it be buying your first home, or selling your current property, there is light at the end of the tunnel. There are numerous signs that 2023 is going to be a brighter year for the housing market, offering a calmer outlook on housing prices and the economic climate.

Why Britain's house prices will not bounce back? ›

People refinancing during 2023 and 2024 will also be stuck on higher rates for longer, even after the Bank of England eventually begins cutting interest rates, Mr Goodwin says. “Those two factors together mean that we are unlikely to see a big bounce back in the housing market,” Mr Goodwin adds.

What is the average UK house price? ›

Average house prices increased over the 12 months to £304,000 (4.1%) in England, to £214,000 in Wales (4.8%), to £185,000 in Scotland (3.0%) and to £172,000 in Northern Ireland (5.0%).

What is the house price forecast for the UK? ›

The average price of a UK home reached £285,000 in March 2023, which is £3,000 lower than February 2023. Despite this monthly decline, however, prices grew year-on-year, rising 4.1% (£11,000) since March 2022. You can read more about how the market's various house price indices are calculated in my analysis.

How much should I offer on a house in 2023? ›

If you really need the home, then you will want to make a house offer that is at least near the asking price — perhaps within 5% to 10% of that asking figure. For most sellers, coming in close to what they want to get and what the market bears for that particular home is considered a good offer.

Will mortgage rates go down in 2024? ›

Chief Economist at First American Financial Corp, Mark Fleming, says an interest rate drop may not happen for several months. "Possibly in 2024, but it will depend on the Fed's decisions about raising rates in the second half of the year," says Fleming.

How high will interest rates go in 2023? ›

Though Fed policymakers skipped an 11th successive increase to the federal funds rate —the borrowing rate for commercial banks and credit unions—at their June meeting , officials revised the 2023 peak rate projection up to 5.6% from the 5.1% target projected in March.

Is my house overpriced UK? ›

The other telltale signs that your property is overpriced include: Getting a lot of people coming to see your property, but not receiving any offers. Other houses nearby are selling quickly, and you haven't yet received an offer. Your asking price is really different from other house prices in your local area.

How long will a house last in the UK? ›

On average, the generally expected and acceptable lifespan of a home should last at least 60 years. However, many believe that the lifespan of a home is much longer than that reaching well over 100 years.

How much longer will a 100 year old house last? ›

Without special care and regular maintenance, their lifespan can reach about 200 years. But even though the materials used in many old houses are designed to last this long, there is still a chance that you will find problems in the structure or foundation.


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