Speaking at Davos, the Swiss ski resort where the World Economic Forum holds its annual meeting, Lloyd's bank CEO Charlie Nunn said that the UK house price fall will be limited.

His views are bolstered by recent numbers on the progress of the UK economy which managed a second month of growth for the final quarter in November 2022. The latest figures are a mild indication that the economy may have dodged a bullet, suggesting a recession could be avoided, challenging some economists to reconsider their previous forecasts for the year ahead.

Economic output in the UK rose by 0.1 per cent in November. This followed a 0.5 per cent gain in October, a trend that makes a final quarter economic contraction unlikely. This, positive news comes in the face of average household energy bills having risen by over than 25 per cent to �2,500 since September.

Mr Nunn said that he expects UK house prices to fall 8-10% this year. His views run counter to the Bank of England's previous forecasts of the coming longest recession on record.

Mini budget shock

The U.K. property sector came to a shuddering halt following the Truss/Kwarteng 'mini budget'� last September and has been sluggish since, as the Bank of England continued to aggressively hike interest rates to attack the double-digit inflation figures.

As delegates from across the world and many economic sectors converged for several days of talks and meetings to address urgent global issues, Mr Nunn gave reassurance to the UK property sector that a price drop may be limited.

The pressure that British housing felt as the impact of former prime minister Liz Truss' disastrous 'mini-budget'� resulted in 40% of all mortgage products on offer in the UK being withdrawn due to concerns over the rapidly rising interest rates.

Since then the Bank of England has continued to chase up interest rates in a priority policy to drive down inflation '� from 0.1 per cent early last year to 3.5 per cent in December - and more hikes on the way after predicting that the country was entering its longest recession on record.

Inflation was recorded at 10.7% last November, and the Bank has hiked rates on nine consecutive policy meetings occasions to lift its main rate from 0.1% to 3.5%. Now more increases are expected over the coming months in 2023.

More evidence of stability

A new report this week from Rightmove would suggest that prices may well be stabilising as it states that asking prices for UK homes were rising slightly in January, that's the first positive sign of a floor for the first time in two months.

Lloyds CEO Mr Nuun said:

'Our base case for 2023 is we will have a recession '� a mild recession '� GDP of about -0.1% this year, unemployment staying strong and that's more because of the constraints on the supply side, interest rates about 4% and a recovery coming into 2023.

'The other challenge a lot of our customers are focused on is house prices and we do see house prices softening about 8-10% this year.'�

Living standards under pressure

The Office for Budget Responsibility (OBR) the independent government agency has forecast that UK households face their biggest fall in living standards on record.

This one statistic has major implications for renters when it comes to the pressure they are under to maintain rent payments.

But as the Mr Nunn, who is head of the largest retail and commercial financial services group in the UK., said, as he sees it, there's two different stories here!

'First of all, there is a relatively small but really important group of customers with mortgages'� who are going to struggle to make ends meet in the cost of living. That's about 1% of customers we can see in the U. and we really need to focus on supporting them,'� he goes on...

'We're seeing a much larger set of customers having to adapt their spending and adapt to both higher costs of living and higher mortgage spend, but there still is real resilience in businesses, in households and in individuals at the higher income levels in the UK and strong spending we're seeing going through.'�

UK economy '� a near miss with recession?

If Mr Nunn's forecasts are correct, and not everyone would agree, but if correct the outlook for property prices could be brighter than generally thought.

The November growth figure of a 0.2% expansion in the services sector is encouraging but manufacturing saw negative production growth in the same month, partially offset by a positive contribution from mining and quarrying, that's according to Office for National Statistics figures.

But plenty of headwinds still remain. The previous consensus in the financial markets that GDP would fall by around -0.3% for November, placing the economy on course for entry into a recession during the final quarter, shows the unpredictability of these times.