An estate and letting agent has made a concerning prediction about what will happen with the property market next year.
Hamptons forecasts that, while house prices are likely to stall next year due to rising inflation and mortgage rates, rental prices will continue to go up.
Because of the pressure on household incomes, the property expert is predicting that prices won't change in the fourth quarter of 2023 in comparison with the same period in 2022 - with a 0% difference across the country.
As a result, 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" aided by pent-up demand from 2023, reports the Echo.
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 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."
