An estate and letting agent has predicted tough times ahead for renters as house prices stall and rents increase. The Daily Mirror reports Hamptons forecasts that while rising inflation and mortgage rates will put the brakes on house prices, those renting will be hit in the pocket.
Property sales are expected to be hit in 2023 and, according to the forecast, this will come from a drop in mortgaged buyers and particularly first-time buyers. However, the estate agent said that 2024 could be a "year of recovery".
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 added: "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."
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". It 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."
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