The latest property forecast indicates UK house price growth will return to single digits this year although the pace will pick up in prime central London as global travel resumes. Predictions or forecasting tend to be worthless in many respects because they are subject to so many variances. For instance, who would have known in 2015 that Brexit would happen, that a pandemic would crash the global economy, cause a massive supply-side shock, kick-start rampant inflation – or indeed that Russia would invade Europe!

In saying that – all things being equal, some commentators are coming forward already.

Tom Bill, Head of UK Residential Research at Knight Frank, has boldly come forward to make the following predictions: “The UK property market has defied gravity over the course of the pandemic. Tight supply, low interest rates, accumulated household wealth and a desire for more space and greenery have conspired to produce double-digit house price growth over the last year. We believe that 2022 is when this begins to unwind, and growth returns to single digits.

“We forecast that UK prices will grow by 5% this year, with several factors acting as a drag on the rampant growth that has taken place in recent months despite the end of the stamp duty holiday last September. First, mortgage rates will continue to rise alongside interest rates. The Ukraine conflict may slow the pace of this normalisation, but the Bank of England will be under pressure to respond to inflationary pressures in the short-term and the UK’s economic recovery in the longer-term.

“Crucially, we believe supply will continue to increase as the distortive effects of the pandemic fade. The supply shortage has been the single biggest cause of strong house price growth and early signs this spring suggest stock levels are building.

“However, we believe the cost-of-living squeeze will bite harder in 2023, and we expect house prices to climb by 1% before starting to slowly pick up again.

“In the five years to 2026, this will produce 13.6% cumulative growth in the UK. We believe some regions will outperform as they benefit from the UK’s changing economy after Covid. The Midlands for example, we believe will benefit from the growth of the logistics sector and life sciences.

“In prime central London, we forecast 3.5% growth this year as the property market inside zone 1 continues its overdue recovery after six years of political uncertainty and the emergence of a more adverse tax landscape.

“We forecast that growth will be 6% in 2023 as the return of international buyers gathers pace. That is later than we previously anticipated and reflects how there is unlikely to be a single moment when overseas demand normalises. Instead, the process will be more gradual and erratic as different countries deal with Covid-19 in different ways. We forecast 22.2% growth in PCL over the period.

“In an echo of the wider UK market, we expect prime outer London to continue to benefit from the ‘race for space’ this year, which is likely to tail off from 2023, producing 15.9% growth over the five-year period. It is a similar story in prime country markets, where house price growth is forecast to grow 17% over 5 years. Prices in prime markets outside of London will also be supported by the fact there is headroom for growth after the comparatively subdued decade that followed the global financial crisis.”