Knight Frank has published its UK residential market forecast for five years from 2020 to 2024.
The company says the headline rate of house price growth across the country continued to slow through 2019, leaving annual house price growth for the UK 0.7% at the end of the year, down from 3% at the same point in 2018, and down from more than 6% as recently as 2016.
The Conservative majority in the General Election should remove some of the market’s uncertainty. In the short term this could release pent up demand that has built in recent years, however interest rates are also likely to begin a gradual process of normalisation in 2020, marking the end of a period of ultra-low mortgages.
This could squeeze affordability for some purchasers, although Knight Frank predicts rates will remain low compared to long term norms by the end of 2024 with economists expecting rates of below 2% by 2023.
Tom Bill, head of London Residential Research at Knight Frank, said: “Overall, we are forecasting price growth of 2% across the UK in 2020 and of 15% cumulatively between 2020 and 2024. Slightly stronger growth is expected in the South East and East of England supported by a more positive outlook for economic and employment growth over the next five years. Once the Brexit deal is completed, we forecast rising momentum across all markets, with price growth reflecting this from 2021 onwards.
“In prime London markets, the erosion of the currency discount as well as the possibility of stamp duty changes for non-residents will weigh on demand in the short-term. After that we expect stronger growth to return before a dip in 2024, the date of the next scheduled General Election.”