Willow Private Finance Decodes Knight Frank's Dual-Year Forecasts: 2022 & 2023

16 October 2023

Assessing the UK Housing Market’s Horizon: 2023 & Beyond

At Willow Private Finance, our commitment is to empower our clients with informed insights. And when it comes to the UK housing market, there’s no resource quite as robust as Knight Frank's data. As we navigate through the labyrinth of housing trends, taking a retrospective look at 2022 and mapping out the future, let’s dive deep into this data to chart our course.


The Economic Tapestry: Mortgage Rates and Impacts


The ebb and flow of mortgage rates offers a compelling narrative. By 2023, these rates catapulted to a magnitude three times of their 2020 counterparts. The financial calm post the global crisis, marked by rates waltzing near zero for over a decade, is now a page turned.

Notably, the five-year swap rate narrates its own tale. This rate slipped to just below 5% in September 2023, a stark shift from the snug sub-1% two years prior. This underscores that our housing market isn't isolated but echoes broader economic tales.


The Housing Market's Dance: Price Dynamics


House prices and their interplay with the economic climate showcase a mesmerising dance.


Flashback to 2022’s Forecast:


  • An anticipated price decline of 5%.


Reality of 2022:


  • A descent to the tune of 7%. This marks a departure from the initial -5% forecast of March 2023.


Projections for 2024:


  • A further dip by 4%.


Projections for 2025 and 2026:


  • A stabilization followed by a hopeful 1% growth in 2026, reflecting improving sentiments.


Fueling this dance are myriad factors: the promise of economic stabilization, whispers of impending rate cuts, and the shadow of the 2024 general election. The latter especially can play a tempestuous role in shaping market demand.


London's Labyrinth: PCL and POL


The London realty terrain is layered and complex, deserving a closer gaze.


Prime Central London (PCL) remains the city's stalwart. A unique blend of factors bolsters its position: dominant cash transactions, price markers 15% below their 2015 peak, and the resurgence of global mobility.


In contrast, Prime Outer London (POL) dances to a different tune. For 2023, the forecast paints a milder decline of -3%, a subtle brightening from an earlier -4% estimation.


Projection into 2025 and 2026:

  • A steady 1% growth for both years, indicating the POL market's resilience and potential.


Country Markets: Peaks, Troughs, and Resilience


The countryside is not just pastoral vistas; its housing market has its drama. Experiencing a 20% surge at the pandemic's height, their trajectory for 2023 indicates a 7% dip. Yet, they stand resilient, with a net positive of 6.7% since Q1 2020.


Further Projections:


  • 2025: Anticipated slight rebound with a 1% growth.
  • 2026: Optimism pushes the forecast to a 2% growth.


Rental Realms: A New Dawn


The rental frontier unfolds its distinct chapters.


In PCL and POL, transformation is the keyword, with surges of 23.9% and 23.3% respectively projected by 2027. August 2023 scripted a record with a growth rate of 5.5% across the UK.


Gazing into the Future:


  • 2023: Rentals expected to soar by 6.5%.
  • 2024: Anticipated growth of another 5%.
  • 2025 & 2026: Continuing the trend, growth of 4% and 3.5% respectively.


The UK housing market's tapestry is intricate, vibrant, and continuously evolving. Knight Frank's data serves as a guiding compass, helping decode patterns and trends. Amid challenges lie significant growth corridors. For market players, it's not just about adaptation but intelligent strategizing for the unfolding chapters.


Should any of the trends and data points discussed here resonate with your personal circumstances or spark questions about your property financing options, please don't hesitate to get in touch. At Willow Private Finance, our knowledgeable team is always available to provide guidance tailored to your unique situation. Whether you're a first-time buyer, considering re-mortgaging, or curious about the rental market's trajectory, we're here to help you navigate with confidence. Reach out to us today and let's discuss the best path forward for you in light of these forecasts.


Resources -


Knight Frank Forecast 2022 - https://www.knightfrank.com/research/article/2022-10-05-uk-property-market-forecast-updated-october-2022

Knight Frank Forecast 2023 - https://www.knightfrank.com/research/article/2023-10-02-new-knight-frank-house-price-forecasts-october-2023


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