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.
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