Should the market decline at the same rate as the 2008 financial crisis, it could wipe almost £54,000 from the value of the average property, research by HBB Solutions has found.
The property purchasing specialist analysed the impact of the previous property market crash during the 2008/09 recession, looking at what level of value was wiped from the average house price between the prior market peak and its lowest point during the recession.
HBB applied this house price percentage drop to the current average house price across each area of Britain, to see what a similar crash could mean based on today’s market values.
The research shows that the average house price across Britain fell by 18.2% during the 2008 market crash and with the average home now worth £295,747, the same reduction today would wipe 3£53,885 off the average value of a property.
Chris Hodgkinson, managing director of HBB Solutions, said: “Although we’ve seen signs that the market has been cooling for quite some time now, the fears of a property market crash have certainly accelerated in the last week or so, with many mortgage lenders reacting swiftly to the threat of escalating interest rates.
“As a result, buyers are now facing a reduced choice of mortgage products, as well as a far higher monthly cost when it comes to their repayments.
“Many simply won’t be able to stomach this far higher financial commitment and, as a result, we can expect to see a sharp decline in house prices over the coming months as sellers struggle to achieve anywhere close to the highs of the pandemic property market boom.”
While London has failed to see the same level of boom as the rest of the UK in recent years, the capital could be hit hardest should the market crash, with over £93,000 wiped off the average value of a home.
The South East (-£78,896) and East of England (-£70,000) would also see some of the largest declines in property values should the market crash and, while the Scottish market would see the smallest reduction, house prices could still drop by over £22,000.
Hodgkinson warned: “Whether or not this correction will be as disastrous as the 2008 crash remains to be seen, but one thing is for certain, those considering a sale should act quick in order to secure a reasonable price for their home.”
