Estate agency Hamptons has downgraded its house price growth forecast for the next three years, projecting a 12.5% increase in property prices across Britain from 2024 to 2027. This revision marks the agency’s lowest forecast in over a decade, 7 percentage points below the price growth seen from 2020 to 2023.
The decision follows tax hikes introduced in last month’s Budget, where Chancellor Rachel Reeves raised stamp duty for second home-buyers and landlords. The stamp duty discount for primary homebuyers, introduced in 2022, is also set to expire on March 31, further increasing costs for homebuyers.
Hamptons’ head of research, Aneisha Beveridge, explained, “The combined effect of persistently higher interest rates and sluggish economic growth is likely to dampen long-term house price performance compared to previous cycles.” Higher mortgage rates and borrowing costs, as outlined by the Office for Budget Responsibility and Bank of England, are expected to weigh heavily on the market in the years to come.
Despite this downturn, Hamptons predicts house prices will rise the fastest in London and the southeast, increasing by 14.5% by 2027. This growth will be driven by limited housing supply and continued demand, though affordability remains a challenge. Wales and the northwest are expected to see the weakest growth, with price rises of 9% and 10.5%, respectively.
Beveridge noted a “cautious optimism” among buyers, with transaction levels expected to rise. The agency forecasts 1.1 million property transactions this year, climbing to 1.2 million by 2025 as mortgage rates gradually ease, though it anticipates only 1.3 million transactions by 2027—lower than its previous prediction of 1.4 million due to rising costs.
Rents, meanwhile, are forecast to increase by 17% over the period, as landlords face shrinking profit margins due to higher mortgage costs, maintenance expenses, and stamp duty surcharges. This trajectory is expected to drive rental prices up further as landlords pass increased costs onto tenants.
Recent market data underscores the growing uncertainty in the housing market. Halifax reported a record national average house price of £293,999, driven by a surge in pre-Budget purchases as buyers rushed to secure homes before the new tax measures took effect. However, the added costs and tax implications may impact overall affordability, leaving many buyers and renters with limited options as they navigate an increasingly challenging landscape.
