Quarterly Report - Autumn 4
Forecast economy

Residential Quarterly | Autumn 2023

Q4 2023

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Matthew Henderson

Associate Director, Residential Research

+44 (0) 7818 254017
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UK house prices have had a third consecutive quarter of negative annual growth; prices have fallen 4.8% in the year to Q3. However, a large part of this fall came at the end of 2022. So far in 2023 prices have risen some months, but overall are down by less than 2%.

Agents expect the first part of 2024 to be tough. As interest rates start to come down and sentiment turns transaction levels should pick up, however, we expect this recovery will start very slowly. The latter half of 2024 will be where market levels are likely to noticeably pick up. Our 2023 forecast of -5% to 0% is retained. As is our cumulative forecast of between 5% and 10%.

Prime Central London house prices fell -0.5% in Q3 after an effectively stagnant Q1 and Q2. The trading environment is more difficult and transaction levels are low, while high quality stock is still in demand and continues to trade.

As with the first half of the year, no huge price changes are expected while the stand off between buyers and sellers continues to protect values. Our forecast for 2023 remains at -3% to 3%, however prices will likely be landing in the negative half of this range. The cumulative forecast is also retained at 5% to 10%.

Annual rental growth was 4.6% in PCL, with 1.8% growth in Q3. Chronic undersupply issues persist which is propping up prices although more stock is starting to appear on the market.

Our 2023 forecast is retained at 2% to 7% and the cumulative is also retained at between 10% to 15% for the next 5 years.

Read full report here.