The UK’s largest mortgage lender expects house prices to fall this year and next before rising in 2025.

Lloyds Banking Group – which owns the Halifax – predicts prices will drop 4.7 per cent this year and by a further 2.4 per cent in 2024 before recovering.

In a statement to shareholders Lloyds says that while prices would fall over the next two years, longer term growth would be steady with prices rising 0.6 per cent by 2027.

Lloyds’ forecasting is based on the Halifax House Price Index, which excludes figures for cash buyers, which currently make up over 30 per cent of housing sales.

Lloyds, which also owns the Bank of Scotland, issued its house prices forecast alongside its trading statement revealing it had made bumper profits as it continues to benefit from higher interest rates.

The banking group revealed a pre-tax profit of £1.9 billion for the three months to September, up from £576m in the same period last year.

Charlie Nunn, group chief executive at Lloyds, says the bank remains “focused on supporting our customers and helping them navigate the uncertain economic environment”.

Meanwhile a different forecast says house prices in England and Wales will fall by four per cent over the final quarter of 2023, thanks to inflation, the cost of living crisis and mortgage rates.

Analysis by the company Reallymoving of over 221,000 property sale prices shows that the average property price will fall from £336,999 in Q3 of this year to £323,594 in Q4.

Reallymoving captures the price buyers have just agreed to pay for property when they search for conveyancing services on the comparison site. The firm claims this provides unique insight into completed sale prices, or Land Registry data, in three months’ time.