This upward adjustment is primarily attributed to the reduction in mortgage costs. Additionally, housing transactions are forecasted to slightly increase to 1.05 million in 2024, up from the previously anticipated 1.01 million.

Lucian Cook, head of residential research at Savills, commented on the updated outlook, stating: “The outlook for 2024 has improved since our last (November 2023) forecasts as mortgage costs have nudged down slightly and are much less volatile. The outlook for economic growth has also slightly improved, pointing to relatively modest house price growth this year, with greater potential over the following few years.”

Despite the positive adjustments, Cook also noted potential challenges: “However, continued uncertainty in the Middle East and higher than expected US inflation have meant that swap rates have continued to rise. Consequently, we are unlikely to see a further meaningful fall in mortgage rates this year, with the potential for short term fluctuations in the cost of debt and house prices, as seen over the past week. Similarly, an Autumn election could impact sentiment towards the end of the year, though polling suggests that most buyers and sellers will have already factored in a change of government, which will minimise the impact.”

Looking ahead, Savills anticipates a more balanced growth distribution throughout the forecast period, underpinned by stronger economic performance in 2025 and 2026. Cook elaborated on future conditions: “Improving economic performance, combined with steady cuts to the base rate, will open up greater capacity for growth from 2025. But without the previously expected falls at the start of our forecast period, affordability constraints will become a factor towards the end of the five-year period, particularly in the already stretched markets of London and the South East.”