The estate agency has also downgraded its forecast for 2026 growth from 4% to 3%

Knight Frank has lowered its forecast for UK house price growth in 2025 to 1%, down from its prediction of 3.5% in May.

The estate agency has also downgraded its forecast for 2026 growth from 4% to 3%.

But its analysts expect rents to rise by marginally more than previously thought as a result of the “unintended consequences” of government reforms.

In the update, head of UK residential research Tom Bill says: A combination of high supply and faltering confidence means we now expect slower UK house price growth this year and in 2026.

He says: The market spent the next few months getting back on its feet, helped by a stable rate environment and the presence of sub-4% mortgages.

Mortgage rates have moved little in either direction since January despite three Bank of England cuts, largely because the reductions were priced in, he says.

However, prices have come under pressure because demand hasn’t kept pace with supply, which has remained high thanks to a hangover of stock from the April stamp duty cliff edge, the appearance of listings delayed from 2024 due to the general election and a growing number of landlords who are selling due to the tougher regulatory environment, he adds.

The number of new prospective buyers in the UK was 8% lower in the year to August compared to the previous 12 months, while new sales listings increased by 6% over the same period.

Bill says: That imbalance, combined with a general sense of hesitation as November’s Budget approaches, has driven our modest short-term downgrades for UK and Greater London house prices.