CBRE Upgrades its 2024 UK House Price Forecast to Positive Territory

• Real estate advisor forecasting 1% house price growth and 6.4% rental growth across the UK in 2024
• London pipped to be the best-performing region over the next five years, recording 18.6% house price growth
  
  

Prices are expected to continue to fall throughout the remainder of the first half of the year but a modest second-half recovery will result in slight appreciation for the year.

Mortgage affordability remains the key dictator of house price movement, with London and the South East expected to underperform the rest of the UK this year. CBRE is predicting London’s house prices to grow by +0.6%, compared to the -3.5% recorded in 2023. Similarly, house prices in the South East are expected to grow by +0.8%.

The West and East Midlands regions are both forecast to record +1.1% growth, while Yorkshire is forecasted for +1.1%, and the North West and North East both at +1.2% . Outside of England, Scotland is forecast to see +1.2% growth and Wales is expected to record the highest growth of all the UK in 2024 at +1.3%.

Despite London being expected to record the lowest house price growth in 2024, CBRE forecasts it to be the best-performing region over the next five years with growth of 18.6%. This is due to the historical trend of the capital recovering more quickly than the rest of the UK following a downturn. For the whole of the UK, CBRE predicts a five-year compound growth forecast of 15.0% between 2024 and 2028.

Scott Cabot, Head of UK Residential Research, CBRE said:

“We’ve upgraded CBRE’s house price forecast for 2024 to reflect the environment of falling mortgage rates, which is boosting buyer budgets and overall demand. This has driven improved sentiment at the start of 2024, but history dictates that this will take several months to translate into rising house prices.”

“In some cases, mortgage rates have increased in recent weeks, reflecting a shift in expectations of the initial base rate cut. This will delay a rebound in house prices, meaning recovery isn’t likely to be seen until the second half of the year. Mortgage affordability will also continue to test pricing, and regions that are facing constrained affordability, like London and the South East, will underperform compared to our ‘headline forecast’ in 2024. We then expect these regions to recover more quickly and outperform the rest of the country over the longer-term.”

Rental Market Forecast

CBRE is forecasting +6.4% rental growth across the UK in 2024, with the North West leading the forecasted growth in England, above the national average, at +6.7%. London and Yorkshire and Humber stand just behind, at +6.6%.

From 2024 onwards, CBRE expects growth to remain robust but decelerate due to falling inflation and stretched affordability. Across the five-year period, CBRE forecasts compound rental growth of +15.7% across the UK and +14% across London. Rental values on new tenancies in London are forecast to grow by +23.7% across the five years – outpacing the whole market forecast.

Cabot added:

“The latest indicators from the RICS survey continue to point to an acute supply and demand imbalance in the rental market, which will sustain strong rental growth in 2024. However, affordability constraints will mean rental growth will eventually start to slow.”