LONDON, Sept 3 Reuters British home prices will make solid gains in the next two years, outpacing overall inflation, but affordability for firsttime buyers is likely to improve based on expectations for lower borrowing costs, a Reuters poll of housing market experts forecast.

Those saving for a cash deposit and wanting to get on the property ladder face rents increasing at an even faster pace, however, eating into disposable income and making it harder to save the money needed to be granted a mortgage.

Home values would rise 2.5 this year and then 3.0 in 2025 and 4.0 in 2026, the Aug. 19Sept. 3 poll of 21 analysts predicted, largely unchanged from a May survey. Consumer inflation was predicted at 2.3 next year and 2.0 in 2026, a separate Reuters poll found.

There is likely to be a modest surge in prices next year as interest rates fall back a bit, said Mike Scott at estate agency Yopa.

Like its peers the Bank of England raised borrowing costs sharply after the COVID19 pandemic to combat inflation but trimmed Bank Rate last month and is expected to do so again once more this year. By the end of 2025 it is forecast to stand at 3.75 versus the current 5.00.

It39;s the fall in mortgage rates that has provided a small boost to the housing market and seems to have set a firm floor under future price falls, said Aneisha Beveridge at Hamptons estate agency.

British home prices unexpectedly fell in August in their first monthly drop since April but the outlook for the…