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Political Uncertainty May Impact London Property Market But Not Other Regions

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    UK Housing Market Forecast to Be Largely Unaffected by Election

    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.

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      Why is London’s Prime Market Likely to Be Impacted Unlike Other Markets?

      Rightmove has predicted that the announcement of a general election won’t change the market that much for several reasons. Firstly, the summer market is already generally slower, so the impact will be felt less than if the election was called in another season such as autumn.

      Secondly, historic data shows that previous elections haven’t had much of an effect on the UK property market, as prices and activity typically hold steady leading up to the election, and there may also be a post-election bounce.

      But Knight Frank has pointed out that in the case of the prime markets, there has been some hesitation among investors due to the proposed reform of non dom rules. According to the old regulations, people could live in the UK without being taxed on their worldwide income. Current chancellor Jeremy Hunt has suggested a limit of four years could be put in place, and Labour have also indicated they plan to revise the current rules. Why not browse the latest buy to let properties in London with RWinvest.

      This has caused some uncertainty in the prime markets, negatively affecting the prime Central London property market.

      Further Reading: Find tips on how to find the best buy-to-let portfolio for sale or get some passive income ideas with our latest guides and insights.

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      UK Rental Growth Will Remain Strong in 2024

      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.

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      Author

      Jessica Ferris

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      Jessica Ferris is a property writer at RWinvest, helping our readers stay ahead of property market trends with the latest news and statistics.

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