The report points to factors such as the election and recent interest rate cut as potential drivers of change in the market, but Bill noted that the 'predictable' nature of the election outcome mean that forecasts remain unchanged - but he added that: "[The] first Labour government in 14 years and the first rate cut since March 2020 have clearly changed the mood music."
Knight Frank's report notes that the mainstream sales market has been impacted by the rate cut more than the change of government, with five-year swap rates falling towards 3.5% in August and a further cut in November being priced into markets.
This, says Simon Gammon - head of Knight Frank Finance - will lead to a “meaningful increase” in the number of lenders offering sub-4% mortgages this autumn, with demand and sales volume increasing towards the the end of the year.
The firm's forecasts for rents in 2024 appear 'broadly on track' - but they note that the uncertainty around the scrapped Renters Reform Bill was difficult to account for.
Tom Bill said of the lettings market:
"In the wider UK market, annual growth was 8.6% in July and falling, which means it should end the year close to our 6% forecast. We will reassess the numbers once we know more about the government’s plans for the lettings industry. For now, only two things are certain."
"First, the Labour government will introduce their own version of the Conservative Party’s Renters Reform Bill during this Parliament. Second, it has been talking tougher on landlords. Measures could include making it harder to evict tenants and tighter rules around green credentials for lettings properties, according to recent press reports. Meanwhile, capital gains tax could also rise in October’s Budget. If enough landlords sell because the new rules are too financially punitive, it will increase upwards pressure on rents, which our forecasts would reflect."
"We therefore expect the next three months to provide more clarity about the longer-term future for the UK housing market than the last three."
