UK house prices will fall by 1.25% over the course of 2019 due to Brexit uncertainties, the Bank of England has predicted in its quarterly inflation report.
Other factors mentioned were affordability constraints, as slowing house price growth has been most pronounced in areas with higher pre-referendum prices compared to incomes.
Government policies dampening down buy-to-let demand like the 3% stamp duty surcharge were also mentioned, as was an increase in housing supply.
Lucy Pendleton, founder director of independent estate agents James Pendleton, said: “The outlook for house prices has dropped off a cliff in a pretty dramatic fashion over the past quarter.
“An about-turn on this scale will cause a few worry lines but, if proved correct, this kind of price action will at least get the market moving.
“As a country, we’ve been labouring under a slump in transactions that has exacerbated affordability problems in many areas as lack of demand has kept prices artificially high.
“What the UK needs is for transaction levels to return to pre-crisis levels because that’s what will impose fair value on more of the markets that have been seizing up over the last few years.
“The regions have also been seeing incredibly strong performances lately even while prices in London have been falling. The capital normally leads the way so, if these forecasts are borne out, this is the rest of the country playing catch up as it has always tended to do.
“In the long run a correction in prices is probably the medicine our housing market needs.”