Matthew Pointon, senior property economist at data platform Capital Economics, and a former economist at the UK government Treasury, has predicted all-property capital values could fall by over 4% in 2023.
Writing a UK property update, the economist was responding to new UK government policy introduced by prime minister Liz Truss as a backstop protection for people who default on their energy supplier’s basic tariff. Businesses will also receive help amid spiralling costs for occupying and using premises.
Pointon said: ‘By boosting real disposable incomes, the energy price cap will give some support to commercial rents, particularly in consumer-facing sectors such as leisure and retail.’
‘However, that benefit needs to be set against the risk that interest rates will now be higher due to the fiscal expansion.’
‘While we think investors’ expectations for Bank Rate have gone too far, property yields are now likely to be slightly higher over the next couple of years.’
‘That will outweigh the boost to rents, and we now expect all-property capital values to fall by over 4% in 2023.’