Knight Frank revises prime central London price forecasts

Knight Frank has revised its house price forecasts for prime central London (PCL) and now expects values to fall this year.

The agency and property brand had changed its house price predictions earlier this year when inflation started to fall and suggested that prices would rise across the country.

It still expects a 3% rise across the UK but rather than a 1% increase in PCL, the agent is now anticipating a 1% annual decline.

Tom Bill, head of residential research for Knight Frank, said: “The political uncertainty hanging over the UK property market has come into sharper focus since Rishi Sunak announced a General Election last week. In particular, the reform of non dom rules had been causing a degree of hesitation in prime markets since they were proposed in March. 

“Under the old rules, individuals could be resident in the UK without being taxed on their worldwide income. Chancellor Jeremy Hunt set out plans to limit this period to four years although there were indications he was prepared to loosen the proposals.

"Not to be outflanked, Labour devised their own tougher rules, which are still to be fleshed out.

“The combination of two different sets of proposals and the uncertainty of a General Election has understandably caused hesitation in the property market.”

Given the near-term outlook for PCL demand has deteriorated over the past two months, Bill said Knight Frank has revised its forecast and now expect prices to fall by 1% this year.

The brand’s other forecasts for greater London and the rest of the country remain the same – for now.

Bill added: “We expect demand will increase as rates begin to fall in the second half of the year.