A large proportion of the anticipated declines in the housing market may already be behind us, according to analysis by Strutt & Parker.

The property consultancy believes the last quarter of 2022 bore the brunt, and is maintaining its previous house price forecasts of between -5% and 0% growth for the UK and -3% to 3% for prime central London for 2023.

Forecasts for prime central London lettings have been revised downwards, however, from the 10% to 15% previously forecast to growth between 5% and 10%. This is due to affordability constraints and anticipated stock increases.

Matt Henderson, associate director for Strutt & Parker Research, commented: “The start of 2023 has seen more activity than most expected and there are signs that the rest of the year may follow suit.

“Inflation has peaked, with the Bank of England expecting inflation to fall to between 5% and 6% by the end of 2023. This tenth and latest rise in the base rate is likely to be one of the last increases, and economists expect both the Federal Reserve and Bank of England to likely start reducing rates at the end of this year, or early next.

“The recent rate increase will do very little to affect mortgage rates as lenders have already priced in these rate hikes. As such, we’ll likely witness increased stability and certainty in the market encouraging transactions and stabilising prices,” Henderson added.

For prime central London, sales price growth in the year to Q4 2022 was 0.8%, and in line with previous forecasts. However, the last quarter was the second consecutive quarter of negative growth at -0.6%, with prices still almost a fifth down on the 2014 peak.

Prime central London rents grew for a sixth consecutive quarter, with the sharp increase indicated by the proportion of lets agreed at less than £500 per week halving from 38% of total transactions in 2021 to just 19% in 2022.

Louis Harding, head of London agency at Strutt & Parker, commented: “We’re in a similar position as last year: a scarcity of stock will continue to uphold premiums in the prime London sales market and create disconnect between those markets above £4m and those below.

“More peripheral and mainstream London markets are likely to not be as robust as those less reliant on borrowing constraints.”