Knight Frank has adjusted its house price forecast for the UK and is now expecting house prices to fall by 7% this year, up from its initial estimate of 5% in March.
Tom Bill, property sector analyst at Knight Frank, said that despite the bleak outlook, there are signs of impending stability.
“The Bank of England held at 5.25% in September after inflation that fell by more than expected and we have updated our house price forecasts to reflect the recent changes,” said Bill.
For next year, the firm anticipates a 4% decrease in house prices, a slightly more optimistic outlook compared to the 5% decline predicted earlier this year.
Knight Frank’s report also zoomed in on specific market segments, including prime central London (PCL) and prime outer London (POL). “We still think PCL will experience a smaller correction,” Bill noted.
For country markets, which had previously enjoyed robust price growth, a 7% decline is now anticipated for this year, instead of the 5% previously forecast.
In the rental market, Knight Frank predicts more robust growth for both PCL and POL. “We think there will be stronger growth this year and next in PCL and POL,” Bill explained.
In light of recent trends, the firm has revised its rental growth forecasts for 2023 to 6.5%, with an additional 5% growth projected for 2024.
