Knight Frank boosts home price forecasts as base interest rates cut “basic” demand – Mortgage strategy
Knight Frank said market pricing with further base interest rates this year will be “a base of demand in the UK housing market this spring, whether or not the cuts have occurred,” Knight Frank said.
The expected lower monetary costs have led real estate agents to raise their home price forecast by 1%.
Tom Bill, a British resident of British Knight Frank, commented that the interest rate dropped to 4.25% after the Bank for England lowered its second quarter of the year, following trade uncertainty.
“Six months ago, the pricing of the financial markets was equivalent to less than one cut between now and December,” Bill said.
“Easy inflation problems, weaker economic data and tariff turmoil raise opportunities for lower interest rates.”
Bill said the money market is now predicting “two to three cuts this year.”
He expects that the housing market will remain buoyant even if “inflation eventually puts up pressure on borrowing costs again.”
Last week, the bank predicted that energy prices in the third quarter “still likely” to raise inflation to 3.5% before “retreating thereafter.”
The agency has raised its estimate of UK prices to 3.5% from 2.5% this year, “due to an increase in interest rate pattern”.
These figures also increased over the next three years, bringing the cumulative five-year total of house prices to 22.8%.
Last week, average house prices in April rose 0.3% in April, compared with an average price of £297,781 the previous month, compared with an average price of £296,899 the previous month.
The lender added that year-to-date growth rate has reached its highest level so far this year from 2.9% in March.
Knight Frank’s rent forecasts “basically unchanged”, but the agency has revised our expectations for the UK and Greater London “edge” due to ongoing supply compression.
The company expects the UK to grow at 18.8% from 17.6% in November and 17.1% in London during the same period 15.3%.
“We expect rental demand will be resilient over the next five years due to burdens in the sales market, which will only intensify as mortgage rates start normal from low bases in recent years,” Bill said.
