It added that any direct impact on house prices may be softened by the share of homes owned outright: it cited 36% owned without a mortgage versus 29% with a mortgage in England. It also highlighted political uncertainty and the risk of tax speculation ahead of the Autumn Budget, alongside questions over the post-summer make-up of government.
Prime markets: weaker near-term expectations
Bill (pictured right) said higher borrowing costs and geopolitical uncertainty were expected to weigh on prime markets, even though buyers typically have more equity.
Knight Frank now forecasts prime central London prices to fall by 2% this year, instead of being flat as previously expected. Prime outer London prices are forecast to be flat in 2026, down from a prior expectation of 2% growth.
For its “prime Country” market — covering £750,000-plus locations outside London — the firm expects average prices to fall by 2.5% in 2026. It said prices in that segment fell by 5.5% in the year to March.
Longer-term view: uplift assumed from 2029
Knight Frank said it had raised longer-term forecasts on the assumption that a new government takes office in 2029. It argued that, despite uncertainty over the composition of any future administration, current polling suggested a tilt towards lower taxes and tighter controls on public spending, which could reduce government borrowing costs and support affordability.