British home prices to flatline this year, rise 3% in 2025: Reuters poll
By Jonathan Cable
LONDON (Reuters) — British home prices will flatline this year, a better performance than expected three months ago, buoyed by supply constraints and expected interest rate cuts later in the year, a Reuters poll found.
After a slowdown, Britain's property sector has picked up in recent months as mortgage interest rates have fallen although some lenders, including Santander (BME:SAN) and HSBC, have recently announced price increases.
Still, the Bank of England is expected to start cutting borrowing costs from a 16-year peak of 5.25% in the third quarter, probably in August, a separate Reuters poll showed.
Those interest rate cuts meant all 19 respondents to an extra question said purchasing affordability would improve over the coming year.
«With little change in house/flat prices, lower mortgage rates during the year and higher incomes will combine to improve affordability,» said Ray Boulger at mortgage adviser John Charcol.
Average home prices are expected to hold steady this year before rising 3.0% in 2025 and 4.0% in 2026, medians in the Feb. 16-28 poll of 26 property market experts showed.
Overall inflation is expected to average 2.5%, 2.1% and 2.0% in the three years, respectively.
«We expect house prices will recover in the second half of 2024 but may not show in the indices until 2025. More competitive rates will support modest growth in 2025 and 2026,» said Marcus Dixon at real estate services firm JLL.
Home sale prices rose in annual terms this month for the first time in six months as demand from buyers strengthened, property website Rightmove (OTC:RTMVY) said earlier in February.
In London — a big draw for foreign investors — prices will increase faster than nationally this year, rising 1.7%,
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