House prices will fall by 5% next year and the same again in 2024, estate agency Knight Frank has predicted.
This drop will put house prices back at the same level seen last summer but still 13% above pre-pandemic levels.
According to the estate agent prices in the capital will also be under more pressure next year due to higher loan-to-income ratios.
Tom Bill, head of UK residential research at Knight Frank, said: “Prices have grown by around 23% since the onset of Covid, largely due to an imbalance between low supply and high demand. We expect the growth that took place during the second half of the pandemic will be reversed.
“As supply and demand continue to normalise, the dominant theme of the next two years will be tighter budgets due to higher monthly interest bills.
“Almost four million first-time buyer mortgages have been issued since the era of ultra-low rates began in 2009, underlining how many borrowers are not used to monthly repayments rising meaningfully.”
At the same time, Knight Frank has revised up its forecast for rental values, as low supply continues to push rents higher.
It is predicting a 4% increase in rents next year and the same again in 2024. It expects rents to increase by over 20% in the next five years.
