Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Nottingham Post
Nottingham Post
National
Vicky Shaw & Jack Thurlow

Warning issued to renters across UK as house prices expected to stall

House prices are likely to stall next year as inflation continues to bite and mortgage rates rise. But rental prices will continue to increase despite affordability pressures on tenants, an estate and letting agent has predicted.

Given the pressure on household incomes, Hamptons said it forecasts prices to be unchanged in the fourth quarter of 2023 compared with the same period in 2022, with 0% change across Britain. Sales are expected to be hit next year, with a drop stemming from mortgaged buyers, particularly first-time buyers, according to the forecast.

The estate agent said 2024 could be a "year of recovery" helped by some pent-up demand from 2023. House prices are expected to be 2% higher in the fourth quarter of 2024 than in the same period in 2023, as reported by the Liverpool Echo.

Read more: Inside 'hidden' and 'quirky' Nottingham alleyway where ‘there’s a bit of everything’

Hamptons said the Bank of England base rate is likely to peak in early 2023, before falling slightly towards the end of the year or early in 2024, helping to ease mortgage costs. It forecasts house sales across Britain will rise from around 1.1m next year to 1.2m in 2024.

The report said 2025 "will mark the beginning of a new cycle as the base rate returns to its new normal, likely to be around 1.75%" - the level at which the rate currently sits. It said: "We forecast that house price growth by the end of the year (in 2025) will be 3% across Great Britain, reflecting a rise in households' real incomes."

Despite affordability issues for tenants, Hamptons said it expects rental growth to outperform house price growth over the next four years, reflecting "the increasingly high-cost environment faced by landlords".

Hamptons forecasts rents will rise by 5% annually next year and in 2024, before slowing slightly to 4% in 2025.

Aneisha Beveridge, head of research at Hamptons, said: "With more stringent affordability testing in place since the financial crash and a record share of outright homeowners, we're likely to see fewer repossessions and forced sales which were a key driver of house price falls in 2008.

"Low-yielding landlords are the group most likely to sell up as they come under pressure from rising mortgage costs and new legislation. Longer term, we expect the market to return to its traditional cycle. Price growth will begin to recover in 2024, with London leading the way as a new cycle dawns in 2025.

"However, stretched affordability will mean we're likely to see considerably less price growth than in the past."

READ NEXT:

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.