Knight Frank has maintained its forecast for UK property prices this year following the election and rate cut, but warns the Budget and rental reforms could change outlook.
The estate agency group has maintained its earlier prediction that house prices will have increased by 3% over the course of 2024.
For London it has forecast a 2% rise and in prime central London it predicts prices will dip by 1%.
In prime countryside locations it foresees a 2% drop in prices over the year.
In the lettings market, it continues to predict that rents will have risen 6% over the course of 2024 as a whole.
Knight Frank has maintained its forecast for UK property prices this year following the election and rate cut, but warns the Budget and rental reforms could change outlook.
The estate agency group has maintained its earlier prediction that house prices will have increased by 3% over the course of 2024.
For London it has forecast a 2% rise and in prime central London it predicts prices will dip by 1%.
In prime countryside locations it foresees a 2% drop in prices over the year.
In the lettings market, it continues to predict that rents will have risen 6% over the course of 2024 as a whole.
In an updated outlook published today it says: “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 says: “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 says its forecasts “appear broadly on track, if you ignore the uncertainty surrounding the Renters Reform Bill”.
It says: “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.”
