Knight Frank has upgraded its UK house price forecast for 2025 from 2.5% to 3.5%, citing a more stable interest rate environment and improving market sentiment. This revision also lifts the five-year cumulative growth forecast for UK property values to 22.8%, up from 19.3% projected in November.
Despite global economic headwinds, the UK property market continues to offer a compelling combination of long-term capital growth, strong rental yields, and legal stability. For overseas investors, the UK represents:
This resilience is reflected in Knight Frank’s latest five-year projections:
|
Year |
UK |
Greater London |
PCL (Prime Central London) |
POL (Prime Outer London) |
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 |
|
Total |
22.8 |
18.2 |
19.2 |
19.9 |
18.8 |
Knight Frank sees the improving rate environment as a driver for buyer demand, particularly in more affordable and needs-driven areas outside the capital. Notably, Greater London’s outlook has strengthened to 18.2% growth over five years, up from the 15.3% forecast in late 2023.
Forecasts for Prime Central London (PCL) have been slightly downgraded for 2025, now flat versus a previous 2% rise. This reflects recent uncertainty around the UK’s political direction and the government’s decision to replace the non-dom tax regime, prompting some wealthy overseas investors to leave.
Yet, long-term optimism remains. Cumulative growth in PCL is still expected to reach 19.2% by 2029. Given that average prices in this segment are still 18% below their 2014 peak, there is significant upside potential for investors seeking value.
On the rental side, Knight Frank has marginally increased its five-year forecasts for both UK-wide and London rents due to an ongoing shortage of supply and robust tenant demand. The UK is now projected to see 18.8% rental growth by 2029, with London close behind at 17.1%.
|
Year |
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 |
|
Total |
18.8 |
17.1 |
20.5 |
20.5 |
The expected introduction of the Renters Reform Bill later this year may discourage new landlords and reduce supply further. Combined with stricter green regulations (EPC rating C required by 2030) and higher financing costs, some landlords are opting to exit the market, limiting rental stock.
Rightmove reports that new rental listings are still 18% below 2019 levels. As mortgage rates rise, the affordability gap between renting and buying will keep rental demand strong—an encouraging sign for income-focused investors.
Magnate Assets Takeaway
For overseas investors, the message is clear: the UK property market remains one of the most secure and rewarding long-term asset classes globally. With renewed confidence in the rate environment, constrained rental supply, and undervalued segments like Prime Central London, now is an opportune time to explore high-performing areas of the UK market.
Reach out to the Magnate Assets team for tailored investment opportunities backed by data, insight, and hands-on support.