Hamptons, a leading UK estate agent, has revised its long-term forecast for house price growth, citing sustained higher interest rates and revenue measures from the recent budget.

The Bank of England's recent interest rate cut to 4.75% and caution about inflation have intensified these expectations.

Despite the pressures, Hamptons predicts a 3.5% increase in average home values by the end of this year, with a further 3% rise in 2025.

Their original forecast predicted stable prices this year, but a drop in mortgage costs due to lower-than-expected inflation has led to a market rebound.

The agency has downgraded its 2026 forecast from 5% to 3.5%, reflecting the impact of persistent high interest rates and a sluggish economy.

Aneisha Beveridge, Hamptons' head of research, highlighted the potential of these factors to dampen long-term price growth compared to previous cycles.

Recent data from other financial institutions supports this trend.

In October, Nationwide reported a slowdown in house price growth to 2.4%, and Halifax noted an annual growth rate of 3.9%, despite the average UK home price reaching a record high of £293,999.

Changes in stamp duty thresholds, set to revert in 2025, could also influence the property market.

Buyers currently benefit from higher thresholds extended by the previous government, but these are due to end in March 2025, potentially prompting a surge in property sales in early 2025, followed by a potential market slowdown.