Rent Rise

National estate agency Hamptons have predicted that rents could rise four times faster than house prices to 2026. Higher interest rates have so far put greater upwards pressure on rents than they have downward pressure on house prices. As a result, rental price growth is likely to significantly outpace residential capital values growth in the next few years.

By using the official House Price Index from the Office for National Statistics as the baseline for their forecasts, Hamptons’ Head of Research predict that 2025 will mark the beginning of a new property market cycle, with London leading the way, outperforming all other regions for the first time since 2015.

The firm’s research team expects the average rent across Great Britain to rise by 25% over the next four years, to the end of 2026, while house prices will see growth of just 5.5%.

Over the four-year forecast period, 5.5% nominal growth for average property values represents a 5% drop in “real” terms – once adjusted for inflation.

House prices are likely to end 2023 some 2.5% lower than at the start of the year, says the team (helmed by Aneisha Beveridge). But in real terms, once inflation is accounted for, that means a more dramatic 7.4% annual fall. “Real” property values will have tumbled by nearly 10% between the start of 2023 and the end of 2024, thanks to rampant inflation in the wider economy.

House prices will probably bottom out in 2024, as mortgage rates gradually fall and households benefit from real income growth. The estate agency is forecasting 0.0% price growth in Q4 2024, followed by a 3.0% increase in Q4 2025 and 5.0% in Q4 2026 across GB.

“2025 will mark the beginning of a new property market cycle,” declares Beveridge, with London starting to outperform all other regions for the first time since 2015 with 5.0% annual price growth.

Overall, London is set to see the strongest growth between 2023-2026 of 11.5%, with prices in Wales likely to remain flat.

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