According to the Hamptons real estate agent, home prices will level off next year due to inflation and rising mortgage rates, but there will be no solution for renters.
Prices are expected to be flat in the fourth quarter of next year compared with the same period in 2022, amid pressure on household incomes.
There will be fewer mortgage buyers and first-time buyers will see sales decline before “a year of recovery” in 2024 sends prices up 2% in the fourth quarter compared with the same period in 2023.
The Hamptons predicts that the Bank of England’s prime rate – currently 1.75% – will peak early next year before easing slightly later in the year or early 2024, helping ease mortgage costs.
Next year, 2025, will “mark the beginning of a new cycle as prime rates return to a new normal”, the report said, adding that this will likely hinge on interest rates. current capacity.
The Hamptons say growth over the next four years will be strongest in central London, followed by the East of England and the South East of England.
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During the same period, rental growth is expected to outperform house price growth, with rents rising 5% annually next year and into 2024, before slowing slightly to 4% in 2025. .
“Lower rental yields in London will make it harder for landlords to absorb rising costs than their counterparts in the North,” the report said.
“This is why we think rental housing supply in the capital looks set to fall further, pushing up rents.”
Aneisha Beveridge, head of research at the Hamptons, said: “With more rigorous affordability testing since the financial crisis and a record percentage of outright homeowners, We may see fewer forced buybacks and sales, which are the main drivers of home prices, in 2008.
“Low yield landlords are the group most likely to sell as they come under pressure from rising mortgage costs and new legislation.”
