Forecast special - economy, prices, rents and transactions

publication date: Jan 3, 2024
author/source: Kate Faulkner OBE, Property Expert and Author of Which? Property Books

Forecast special - economy, prices, rents and transactions



During these turbulent times it’s good to understand what’s being forecast for prices, rents and transactions so you can make better property decisions – whether you are buying, selling, renting, letting or investing in property.

And the news is a little better than it was this time last year, thank goodness!

So, we thought it would be useful to bring together a summary of the forecasts for 2024 (and beyond) that we think provide some great information and explanations of what’s going to happen next.

Please note!  
We don’t believe in the ‘Armageddon’ that forecasters think prices and transactions will tumble as they did in 2007/8 and in the 1990s. We also don’t believe those that are still telling people property prices double every 10 years – they don’t! In fact, most ‘average’ property prices haven’t increased in line with inflation since 2005. As a result, those investing with 100% cash have probably lost money investing in property, not made it, even though the nominal value may have increased.

As such, we haven’t included these extreme and incorrect forecasts below. Instead, we have chosen the forecasters that we trust. They aren’t always 100% correct, but they do provide excellent and expert commentary and have, over the years, proved to be the better forecasters to listen to.

 Download the complete version of Kate Faulkner's comprehensive forecast report here


Who is forecasting what for 2024?

For a summary of what’s likely to happen in 2024 to prices, rents, transactions and economic forecasts or what’s likely to happen over the next five years, please see attached ‘2024 Forecast Summary’.


The best economic forecasters

Over the years we have come across many forecasters and tracked their progress and success rate.

For me, the ones which have been the best and most consistently correct are Capital Economics. They have successfully predicted inflation rates and base rates for many years, even though they have often been an outlier with regards to their forecasts.

And these two indicators are the most important ones to the property market, so we always keep an eye on what they predict – and if their forecasts change post a budget, autumn statement, global influencers.

So, what are Capital Economics predicting?

Key to the future of the property market are inflation and base rates. Currently, the big question is when do we get back to ‘normal’ and what might that look like?

2% inflation and around 3% base rates seems to be the most likely future, as long as we don’t get more economic shocks and, from the table below, we can see that’s going to take until Q2 of 2024 for 2% inflation, but it will take until 2025 for us to see 3% base rates, giving likely mortgage rates of 4-5%.


 Source: Capital Economics

KPMG: Forecasts

Additional forecasts come from KMPG for 2024, suggesting that inflation could come down to 2.7% in 2024 while base rates don’t move so much: 5%.



OBR: Forecast evaluation report – October 2023

Really good summary of the forecasts and lots of useful charts looking at forecasts and their impact up to 2028.

Inflation forecasts suggest the 2% target could be reached in early 2024, according to their March 2023 ‘average of external forecasts’. 


 Source: OBR


 Download the full version of Kate Faulkner's comprehensive report for all economic forecasts including CEBR, PwC, NIESR


Savills: Mainstream Residential Forecasts 2024-28

Savills are one of the best and most detailed of forecasters for the property market and show below their expectations for prices, rents and transactions.


Savills: The long term outlook: Mortgage affordability still holds the key
According to Savills: “Even though it appears we have hit the peak of the interest rate cycle at a bank base rate of 5.25%, the first cuts in interest rates still look someway off. That means heightened affordability pressures are likely to result in further house price falls over the first half of 2024. A peak-to-trough house price adjustment of in the order of -10% still looks like it is on the cards, albeit occurring over a longer period than we anticipated during late 2022. However, the worst is certainly behind us, with -7% of falls forecast expected to have materialised by the end of 2023.”



JLL: UK Residential Forecasts 2024-2028

JLL used to do some really good and useful regional forecasts, but have reduced down the detail to UK and London. They are expecting ‘normal’ prices to rise by around 2.7% annually over the next few years, but Central London to rise at 3.7% and Greater London in between of 3.1%.