Rises in short-and-long interest rates and the likelihood of further increases over the next 12 months pose a threat to real estate prices. While some have suggested that this will not derail market momentum (and price gains), an array of valuation measures point to the sector already being overvalued. Accordingly, following an exceptionally strong start to the year, we see yield falls and price hikes slowing at the all-property level over the course of the year and even going into reverse in the apartments sector in H2. The result of those changes is that our forecasts for all-property total returns have been cut to around 10% in 2022 and 4% in 2023, from our previous forecast of 12% and 6%. UK Housing Drop-In (10th May 10:00 BST/17:00 SGT): Economists from our property team are hosting a 20-minute briefing to explain why we think UK house prices are heading for a fall – and how bad the fallout will be. Register now.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services