A UK estate and letting agent has issued a warning for renters in the UK, suggesting house prices are likely to stall in 2023, due to inflation and the rise in mortgage rates - but the price of renting a home will continue to increase.
Because of the pressure on household incomes, estate agent Hamptons predicts house prices to remain the same in the fourth quarter of 2023 compared with the same period in 2022, with a 0% change across Britain.
According to the forecast, house sales are expected to be hit next year with a dip stemming from mortgage buyers - and first-time buyers in particular, Liverpool Echo reports.
The estate agent said 2024 could be a "year of recovery" thanks to increased demand in 2023. House prices are expected to be 2% higher in the fourth quarter of 2024 than in the same period in 2023.
Hamptons said the Bank of England base rate is likely to hit a peak in early 2023, before falling slightly towards the end of the year or early in 2024, helping to ease mortgage costs. It predicts house sales across Britain will increase from around 1.1m next year to 1.2m in 2024.
In the report, it said that 2025 "will mark the beginning of a new cycle as the base rate returns to its new normal, likely to be around 1.75%" - which is the level where the rate currently is at.
The report continued: "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 says it predicts rental growth will outperform house price growth over the next four years, which reflects "the increasingly high-cost environment faced by landlords".
It has been predicted that 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."
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