Cost of living - latest updates: Huge drop in UK house prices predicted; energy bills to fall by hundreds (2024)

Key points
  • Energy bills to fall by more than £400 from tomorrow
  • But suppliers sound warning over winter prices
  • House prices fall 3.5% - with huge drop predicted over next year
  • Tesco slashes price of 500 essentials
  • Britons giving pets 'human medicine' to avoid vet bills
  • Dairy Milk locked away| Send us unusual security measures you've seen
  • Everything to know before energy price cap changes this weekend
  • Your dilemmas:Can my mortgage offer be withdrawn?
  • Budgeting Mum:Finding cheap petrol|Electric cars|Saving for your children|Do food subscriptions save money?|Holiday spending
  • Live reporting by Brad Young

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Savings bank to boost customers' chances of winning through Premium Bonds

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

From next month, the prize fund rate will increase to 4% from 3.70% - its highest level since 2007.

Odds on each £1 Bond will therefore increase from 24,000 to 1 to 22,000 to 1.

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

The bank has also increased its interest rates for variable products.

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


Turning carbon dioxide into stone

In this edition of the Business Podcast, Emma Crosby, sitting in for Ian King, is joined by a leading economist as revised GDP figures show slight growth for the first quarter of the year.

Plus she talks to the boss of Nationwide as the building society warns that continued mortgage rate hikes are threatening a "significant drag" on the housing market.

And she hears from the Icelandic company turning carbon dioxide into stone.


Increasing alcohol tax to 'heap misery' on consumers

By Brad Young, live reporter

Enjoying a drink in the summer sun may soon become more costly, as brewers and winemakers warn changes to alcohol taxation will increase the price of bottled beers, spirits and wines.

Some brewers are reportedly considering reducing the strength of beer to sidestep costs, while there are fears some wines may disappear from the shelves altogether.

Alcohol duty will be unfrozen on 1 August for the first time since the beginning of the pandemic and Chancellor Jeremy Hunt confirmed in March that it will increase in line with inflation.

Taxation on bottled beers and spirits is set to increase by 10%, costing the industry £225m, trade associations have said.

"With business costs set to soar, it's impossible to see how brewers can carry on exactly as they are whilst still avoiding customers paying over the odds for their beer," saidEmma 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 "mounting price increases across supply chains" in the last two years, she said.

The challenge for wine producers may be even greater, given the introduction of a new system of calculating alcohol duties on the same day.

Wines will be taxed more the stronger they get, rather than by the volume of liquid as they are under the current system.

This equates to another 10% rise in costs, so when the end of the duty freeze is accounted for too, taxation on the average 75cl bottle of 12.5 abv wine will be 20% higher, according toSimon Stannard, director of policy at the Wine and Spirit Trade Association.

"Alcohol tax rises will only further fuel inflation. It will heap more misery on consumers. And it will damage British business, especially those in the hospitality supply chain, who are still trying to recover from the pandemic," he said.

Alcohol levels in wine cannot be reduced in the same way as beer, he said, because it changes the product.

Wine from hotter countries, which naturally produce stronger wines, will be "penalised most of all", he said.

Draught products in pubs will not suffer the same fate due to a government scheme that promises their duties will be up to 11p cheaper than for bottled or canned products.

The treasury has been contacted for comment.


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Calls to abolish standing charges and increase unit rates

The standing charges on energy bills should be abolished or reduced, bosses in the sector have said.

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

The standing charge is a fixed amount that people pay regardless of usage and funds the upkeep of the electricity and gas grids.

"The standing charge hits those who are careful about their energy use hardest – and these are often people from low-income households and prepayment meter customers," Centrica chief executive Chris O’Shea told the Sun newspaper.

Greg Jackson, chief executive of rival Octopus Energy, agreed, calling for unit rates to be increased instead.

"Standing charges are too high," he wrote on Twitter.

"Costs should be moved on to unit rates with extra support for low-income/disabled customers."

If this happened, some poorer people, such as those with large families or in poorly insulated homes who need to use more energy, could see their bills rise.


Energy prices - what's going to happen next?

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


Tesco slashes price of 500 essentials

Fruit, vegetables, rice and tuna are among products coming down in price, as scrutiny over retailers increases.

With food inflation at 18.4%, supermarket bosses denied claims of profiteering while appearing before a select committee of MPs earlier this week.

Today, Tesco has said it will cut the cost of everyday items by 13% on average.

Pasta will see a 5p reduction and a four-pint bottle of milk will fall 10p, to £1.45.

Sainsbury's and Aldi also confirmed drops in the price of milk, which saw rampant inflation over the past year.

Tesco chief product officer Ashwin Prasad said: "We know that more than ever our customers are looking for great value, and this huge round of price cuts on 500 key household essentials will help their budgets go a little further.

"And we'll continue to work closely with our suppliers to pass on price cuts to our customers whenever we can."


House sales plummet 27% amid 'mortgage upheaval'

Earlier today we reported on a 3.5% fall in house prices with further cuts predicted, in part because sellers are struggling to shift their houses at asking price as buyers face increasing mortgage rates.

New figures released by HMRC show the number of houses sold in May tumbled by 27% compared with 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 a former residential chairman of the Royal Institution of Chartered Surveyors.

"Mortgage upheaval and inflation concerns have meant fewer buyers and more protracted negotiations, which is resulting in fewer transactions," he said.

Those who have to move will do so regardless, but sellers need to "price realistically" to attract any other customers in the coming months, said Jason Tebb, CEO of property search website

"With the potential for further interest rate rises and lenders pulling their mortgages and repricing upwards, borrowers are likely to have concerns around affordability," he said.

Across the UK, 80,020 transactions were recorded last month, which was 3% lower than in April.

One caveat to the headline figure is that there were more bank holidays in May 2023 than in the same month last year.


Britons giving pets 'human medicine' to avoid vet bills

Britons are "putting their pets' lives at risk" by acting as DIY doctors to avoid vet bills, research has found.

More than one in three are diagnosing pets themselves or giving them human medicine, according to a report by Snoots Vet.

At the same time, they found 55% of people have seen their pet insurance increase and the average cost of a vet bill hit £572.

Approximately a quarter of pet owners put off going to the vet to see if the animal recovers and more than 40% have missed vaccinations due to the cost-of-living crisis.

"Pets are part of our family, but British pet owners are putting their furry family members lives at risk to save on costs, which could end up leading to more expensive treatment costs down the line," said founder of Snoots Vet, Jonathan Moyal.


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

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

They are aimed at key workers like nurses and teachers, kitted out with John Lewis furniture and served by Waitrose shops and cafes.

The company said it is entering the market as private landlords leave to address the demand for rental properties.

In December, John Lewis unveiled a £500m deal with investment giant Abrdn after saying 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 in the year, John Lewis wants to convert an empty warehouse in Reading into properties.

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

Cost of living - latest updates:  Huge drop in UK house prices predicted; energy bills to fall by hundreds (2024)


Will UK house prices fall in 2023? ›

How far will house prices fall in 2023? We expect UK house prices to fall by up to 5% in 2023 now mortgage rates are sitting at between 5% and 6%. If mortgage rates were to come back to 4-5%, house prices would change by +/- 2% over the course of the year as it's much more manageable for home buyers.

What will happen to house prices in 2023 UK? ›

In November 2022, property website Zoopla said it expected prices to fall by 5% in 2023. The Bank of England has predicted house price growth to slow down later on this year, with mortgage providers expected to cut down on lending as the economy struggles.

Will house prices go down in the UK? ›

In March this year, the Office for Budget Responsibility (OBR) predicted house prices will drop by 10% over the next two years. At the start of this year, Santander said it was forecasting a 10% fall in 2023, while Lloyds Bank previously announced it was braced for a 7% drop and Nationwide said it expects a 5% dip.

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

2023 could be the year for you to buy a house. People often spend more on rent than they would do on mortgage payments, so owning your own home could actually mean you'll be spending less each month than currently, particularly if mortgage rates decline later on.

Will UK house prices fall in next 5 years? ›

But they all agree that by the end of 2024, house prices will be around 10% lower, erasing half of the gains made by homeowners since the beginning of the pandemic. According to Savills, if mortgage lenders cut rates next year, house prices will start to recover from the end of 2024 onward.

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

The Current Housing Market

Meanwhile, the Office for Budget Responsibility (OBR) predicted prices could drop 9% by 2024 before rising again in 2025. The decline in house prices is mainly due to the cost of living crisis and increasing mortgage rates, causing households to tighten their finances.

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).

Will house prices drop in 2025 UK? ›

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.

Is it a good time to buy a house in UK now? ›

“While prices have dipped for now, in the long-term they will inevitably rise again – so if you fall in love with a property, and are in the financial position to afford to move – now could be a great time to secure a good deal.

Will the UK housing market burst? ›

Double-digit falls is likely for next year, as are the chances of a more significant crash. The risk of house price crash is “much more likely” than a few months ago, analysts are warning, as mortgage rates hit 6 per cent.

Are house prices going down Scotland? ›

The average house price in Scotland reached a record high in October 2022. However the latest data shows a fall in house prices towards the end of last year, and it is speculated that prices may continue to fall in 2023 due to the knock on effects of increased interest rates on mortgage affordability.

Will house prices go up in England? ›

Rightmove House Price Index

Its most recent data shows a rise of 0.2% in April 2023. This follows a rise of 0.8% in March 2023, with very little movement reported in February 2023.

Will mortgage rates go down in 2024? ›

Fannie Mae, Mortgage Bankers Association and National Association of Realtors predict that the 30-year fixed-rate mortgage will decline at least half a percentage point through the middle of 2024. Percentages are the predicted quarterly average rate for the 30-year fixed-rate mortgage in Freddie Mac's weekly survey.

How can I increase the value of my house UK? ›

How to add value to your home
  1. Fit a new kitchen. ...
  2. Build an extension. ...
  3. Converting a garage, loft or cellar. ...
  4. Make it more energy efficient. ...
  5. Split your home into two or more properties. ...
  6. Make it more open plan. ...
  7. Improve the garden. ...
  8. Give it a good clean.

Will mortgage interest rates go down in 2023? ›

30-year fixed rate mortgage will average 6.6% for Q3 2023, according to the June Housing Forecast. Freddie Mac chief economist Sam Khater. “[W]ith the rate of inflation decelerating, rates should gently decline over the course of 2023.”

Will house prices go down in 2024 UK? ›

Analysts at Nomura predict UK house prices will drop 15 per cent by mid-2024, estate agency Savills (SVS) and UK banking group Lloyds (LLOY) forecast prices will slump 10 per cent in 2023, while Knight Frank, another agency, is predicting a 10 per cent fall over 2023 and 2024.

Will home prices drop in 2023 recession? ›

Nationally, home prices could end the year less than 1% lower than their 2022 peak, says Danielle Hale, chief economist at Regional markets, however, are seeing a lot of variance.

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.


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