Although some confidence has returned, a more significant improvement in market conditions is likely to only come once a Bank of England base rate cut is on the horizon and there is a more substantial decline in mortgage rates.
We have pencilled this in for the second half of this year, although some economic forecasters have brought forward their expectations, as a result of recent inflation data which saw CPI fall to 3.9% in November.
Across outer prime London, price falls are expected to total just -2.0% this year and the trends seen in 2023 likely to continue, with debt-dependence very much dictating the market performance of different property types and locations.
Despite some uncertainty surrounding the planned general election, prime central London is the only residential market not forecast to experience a dip in values in 2024. With prices still well below historic peaks, this market represents a ‘buy’. Price growth is expected to return in 2025 once the global economy picks up more significantly and any domestic political instability subsides.
Over the medium term, a recovery looks well overdue but at around 19% in the five years to 2028, we expect it to be less aggressive than in previous cycles given a higher tax environment and greater scrutiny on sources of buyer wealth.
Prime house price forecasts