Knight Frank has revised up its estimate for UK prices to 3.5% from 2.5% this year due to the improving rate landscape.
The figures have also risen slightly over the following three years, taking the cumulative five-year total to 22.8% from 19.3%.
November forecasts can be found here:
| UK | Greater London | PCL | POL | Prime Country | |
| 2025 | 3.5% | 3.0% | 0.0% | 3.0% | 2.5% |
| 2026 | 4.0% | 3.0% | 2.5% | 3.5% | 3.5% |
| 2027 | 4.0% | 3.5% | 4.0% | 3.5% | 3.5% |
| 2028 | 4.5% | 3.5% | 5.5% | 4.0% | 4.0% |
| 2029 | 5.0% | 4.0% | 6.0% | 4.5% | 4.0% |
| 5 Year Cumulative 2025-2029 | 22.8% | 18.2% | 19.2% | 19.9% | 18.8% |
Knight Frank has also pushed its forecast for Greater London slightly higher, with five-year growth increasing to 18.2% from 15.3%.
The estate agency think the more favourable rate environment will also underpin demand and prices in the needs-driven markets of prime outer London and the prime country market, which covers a range of rural and urban markets above £750,000 outside the capital.
However, they company has cut its near-term forecast for prime central London due to the fact the political backdrop has become more uncertain for higher-value markets over the last six months.
Knight Franks now think prices will be flat in 2025 rather than rise by 2% but the relatively small drop in cumulative growth expectations (19.2% now versus 21.6% in November) underlines how strong price growth could quickly materialise in a market where average prices are down by 18% over the last decade.
The government showed little flexibility in its negotiations with groups representing wealthy overseas investors and decided to scrap the UK’s non dom regime in favour of a new scheme that makes the country less competitive on the international stage.
It means a number of non doms have left the UK and demand in prime markets remains subdued. While average prices in PCL fell 1.6% in the year to April, they rose 1.2% in prime outer London.
Despite the uncertainty, the recent tariff turbulence means the UK could ultimately capitalise on its image as a stable place to invest by default,
Furthermore, the recent local election results suggest internal disquiet may grow about the direction the government is taking.
Rental market
Knight Frank’s rental forecasts are largely unchanged, but the company has revised up its expectations for the UK and Greater London marginally due to the ongoing supply squeeze.
The agency expect cumulative growth of 18.8% in the UK (17.6% in November) and 17.1% in London, up from 15.3% six months ago.
| UK | Greater London | PCL | POL | ||
| 2025 | 4.0% | 3.5% | 3.0% | 3.0% | |
| 2026 | 3.5% | 3.0% | 3.5% | 3.5% | |
| 2027 | 3.5% | 3.0% | 4.0% | 4.0% | |
| 2028 | 3.0% | 3.0% | 4.0% | 4.0% | |
| 2029 | 3.5% | 3.5% | 4.5% | 4.5% | |
| 5 Year Cumulative 2025-2029 | 18.8% | 17.1% | 20.5% | 20.5% |
The expected introduction of the Renters Rights Bill later this year is one factor driving supply lower and rents higher.
The new rules will make it harder for landlords to reclaim possession of their property and increase the risks around the collection of rent.
The number of new rental listings in England in the first quarter of this year is still 18% lower than it was in the same period in 2019, Rightmove data shows.
The prospect of tougher green regulations and rising mortgage costs are also squeezing supply as some landlords opt to sell.
For example, private rented homes will need a minimum Energy Performance Certificate rating of C from 2030. The tougher requirement is why we have revised up our forecasts marginally across all areas in 2029.
Knight Frank expect rental demand to be resilient over the next five years, due to affordability pressures in the sales market which will only intensify as mortgage rates normalise from the low base of recent years.
