Political Uncertainty May Impact London Property Market But Not Other Regions

Knight Frank have updated their UK House Price Forecast in May to account for possible uncertainty following the general election announcement last week. Since the announcement, many experts have commented on how this may change the outlook for investors investing in buy-to-let.

However, Knight Frank believe this political uncertainty will primarily affect the prime market in Central London, with other regions and Greater London seemingly set to escape unscathed. To reflect this, Knight Frank have revised the 2024 projections made before the election was called. They now anticipate prime Central London property prices will fall by 1% this year, down from the predicted increase of 1% that was put forward in January.

However, the forecasts for the UK as a whole, Greater London, and prime Outer London have remained the same. This means that the five-year cumulative growth predicted for the UK as a whole still stands at 20.5%, and Greater London’s holds at 15.9%. Prime Central London’s projected price growth now sits at 16.4%. Their UK house price forecast 2025 has stayed unchanged despite the election announcement.

Knight Frank have also revised their forecasts for the lettings market. Average rental growth is not as promising for London as it was in the real estate experts’ January forecasts. They now anticipate average rental value growth to be 2% in prime Central London in 2024, which is down from the original prediction of 5.5%, and 2.5% in prime Outer London, down from 4.5%.

However, the general market and other regions have seen their projected growth either stay the same or increase slightly. Knight Frank’s five-year forecast for rental growth is now 20.4% for the UK as a whole, 19.3% for Greater London, and 15.9% for prime Central London.

The ongoing undersupply of available rental properties combined with a competitive jobs market, high immigration, and rising mortgage costs are all still contributing to strong rental growth which looks set to continue.

According to Oliver Knight, head of residential development research at Knight Frank: “It is unlikely that rental supply will increase in the next few years at a level that will materially impact headline rental growth.”

To find out more about the UK property market, take a look at our buy-to-let area guides covering topics such as available investment property in Bradford and available investment property in Exeter.