62% of equity release advisers predict that house prices will continue to fall in 2023, according to new research from Canada Life.

31% of advisers surveyed anticipate that they could fall between 5% and 10%, indicating potential further disruption for the housing market this year.

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 show equity release adviser’s opinions are split on the potential for the equity release market. 43% of advisers think the market will grow in 2023, while a further 40% think it will shrink.

Likewise, outlook is divided as to when the market will return to pre-Q4 2022 levels. Total lending in Q3 2022 reached £1.71bn, decreasing by 17% to £1.36bn in Q4 2022 due to the political and economic uncertainty. 61% believe it will return to pre-Q4 2022 levels in 2023, albeit most (33%) say that it will not be before Q3. The remainder believe it will be 2024 or beyond (39%).

Other industry predictions for the next 12 months include an increase in younger homeowners using equity release, but in smaller loan amounts. Supporting data shows that 40% of advisers expect the average equity release loan values to decrease and 48% expect that the average age of an equity release customer to decrease in age this year too.

Alice Watson, head of marketing communications, Canada Life UK, said: “It’s clear that the current economic climate isn’t helping consumer confidence and that is being felt across the housing market. 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.”