The British property market’s post-crash boom will come to a halt in 2017 when house prices flatline after five years of increases, according to an industry forecast.
Uncertainty caused by the EU referendum and weaker consumer sentiment will result in two quiet years in the housing market, according to property firm Savills, with zero growth next year followed by a 2% rise in 2018.
In London and the east Midlands price growth will grind to a halt, while in the north of England, Wales and Scotland prices are expected to fall over the year, Savills said. Only the south of England outside the capital is expected to buck the trend, with growth of up to 2.5% predicted in some regions.
Releasing the annual forecasts, Savill’s UK head of residential research, Lucian Cook, said the referendum decision had made predicting the market more challenging than ever.
“The effect of Brexit is complicating a natural shift towards the later stages of the housing market cycle, when the strongest growth is seen beyond London and the south-east,” he said.
“What is clear is that the housing market does not like political and economic uncertainty and this points to a lower growth, lower transaction market across the board.”
Since June’s vote, estate agents have reported a fall in the number of sellers coming to the market. On Thursday, data from the website Housesimple showed that in four out of five towns there was a fall in the number of new listings last month.
Cook said he expected the number of homes changing hands to fall by 16% in 2017 to just over 1.1m and that it would drop further the following year. This fall will be driven by a decline in buy-to-let landlords following recent and impending tax changes. In April, the upfront cost of buying a rental property was increased with a new stamp duty surcharge, and from next spring the tax relief that landlords can claim on mortgage payments will start to fall.
On Wednesday, the UK’s largest building society, Nationwide, reported that prices had stalled in October, and said that in some parts of the country affordability was being squeezed.
Cook said he expected first-time buyers to face “significant ongoing challenges in raising a deposit without financial assistance”, and that schemes such as the help-to-buy equity loan “look like they will need to become long-term features of government efforts to sustain housebuilding and home ownership”.
Data compiled by Savills using its own research and figures from the Office for National Statistics shows the average cost of a UK home increased by £47,900 between August 2011 and the same month in 2016, to £214,000. Over the same period, prices in London went up by £192,100, to an average of £481,000, while at the other end of the scale the north-east saw prices rise by £10,100, to £122,000.
Growth is expected to be lower over the next five years, with Savills anticipating that UK prices will increase by £27,900 by December 2021, to £241,900.
End of the property boom? UK house prices to flatline, says forecast – The Guardian