UK estate agent Hamptons predicts that rental prices will grow four times faster than house prices between 2023 and 2026.
The report forecasts a 25% rise in rents across Great Britain during this period, with the most substantial increases occurring throughout the rest of 2023 and into 2024.
In contrast, house prices have stagnated, with an anticipated decline of 2.5% by the end of the year, though the agent sees this as a correction of the post-Covid boom rather than a genuine crash.
“We argue that the market is in the midst of a U-shaped slowdown, rather than the V-shaped crash of 2008, given that interest rates may stay higher for longer which we’ll see play out over the coming years,” said Aneisha Beveridge, Hamptons’ head of research.
Despite the abundance of data, there is no real consensus on the recent trend in house prices.
For instance, the Office for National Statistics, where Hamptons sources its data, has yet to record year-on-year price falls. Meanwhile, Halifax and Nationwide have logged annual price falls of 5%.
The ONS tracks all completed sales in mortgages and cash, while the indexes base their data on mortgage approvals alone.
Unfortunately for tenants, neither metric offers much consolation.
“The rental market has provided the greatest shock given the record-breaking rental growth recorded over the last 18 months” noted Hamptons.
In a cruel twist of market dynamics, the very factors depressing house prices are the same factors pushing rents up, with the stark discrepancy attributed to higher mortgage rates and a shortage of supply, with 43% fewer homes available to rent compared to July 2019.
Hamptons tips a cyclical recovery in house prices from 2026 onwards, with house prices growing by 5.5% by the final quarter, though this still represents a 5% fall in real terms, given the effects of runaway inflation.