While the more uncertain global backdrop due to the new US tariffs regime means we have become more confident in our below-consensus UK GDP forecast, the prospect of falling mortgage rates suggests UK housing demand is well insulated from US tariffs and transactions will continue to recover to more normal levels. With earnings set to continue to grow at a decent rate over the next few years, in the year to Q4 we forecast house prices to rise by around 3.5% this year, by 4.5% next year and by 3.5% in 2027, which is more than the consensus. Interest rates could fall a bit quicker than we expect this year, but if that’s partly due to a weaker economy then house prices may not rise any faster.
We will be discussing whether the UK economy’s struggles will derail the housing market recovery in a 20-minute online briefing at 3pm BST on Thursday 1st May. (Register here.)
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:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services