Knight Frank has maintained its forecast for UK property prices this year after previously stating that there would be an increase of 3% over the course of 2024. However, the estate agency group has warned the outlook could change in light of the budget and proposal rental reforms.
It has forecast a 2% rise in property prices in London, whilst predicting that prices in prime central London will fall by 1%. Prime countryside will dip by 2%, with the estate agency also anticipating that rents will rise by 6% over the course of the year.
In an updated outlook published today, Knight Frank said: “In the three months since our last housing market forecast in May, there has been a general election and a rate cut.
“The Bank of England acted earlier than expected when it cut by 0.25% this month, but the outcome of the election was predictable.
“Our forecasts appear on track but the first Labour government in 14 years and the first rate cut since March 2020 have clearly changed the mood music.
“We have left our numbers unchanged for now but will reassess them after the Budget on October 30.”
On mortgages, it said: “Following the drop to 5% from 5.25% and lower-than-expected inflation data, SONIA five-year swap rates fell towards 3.5% in August. Financial markets were pricing in a further cut in November.
“It will lead to a “meaningful increase” in the number of lenders offering sub-4% mortgages this autumn said Simon Gammon, head of Knight Frank Finance.
“As a result, demand and sales volumes will be stronger in the final months of this year than in 2023.”
On rents, Knight Frank said: “We will reassess the numbers once we know more about the government’s plans for the lettings industry.
“For now, only two things are certain.
“First, the Labour government will introduce their own version of the Conservative Party’s Renters Reform Bill during this Parliament.
“Second, it has been talking tougher on landlords.
“Measures could include making it harder to evict tenants and tighter rules around green credentials for lettings properties, according to recent press reports.
“Meanwhile, capital gains tax could also rise in October’s Budget.
“If enough landlords sell because the new rules are too financially punitive, it will increase upwards pressure on rents, which our forecasts would reflect.
“We therefore expect the next three months to provide more clarity about the longer-term future for the UK housing market than the last three.”
