UK house price growth slows to 2.5%

Robyn Hall

August 22, 2016

UK house price growth is expected to slow to 2.5% in 2016 and to -1% in 2017, research published by Countrywide estate agents suggests.

House price growth is forecast to slump across all regions of the UK over 2016 and 2017.

But despite the fall, the survey projects a recovery at the end of the period continuing into 2018.

London is likely to see price growth slow to 3.5% in 2016 before a fall of 1.25% in 2017 and a recovery to 2% in 2018.

Property in prime areas of central London is expected to be hardest hit.

Fionnuala Earley, Countrywide’s chief economist, said: “Forecasts in the current environment are trickier than ever as the vote to leave the EU has thrown up many risks. Our central view is that the economy will avoid a hard landing, which is good news for housing markets.

“However, the weaker prospects for confidence, household incomes and the labour market mean that we do expect some modest falls in house prices before they return to positive growth towards the end of 2017 and into 2018.”

Weaker economic conditions are also expected to hit prices in the North, the Midlands and Wales. The North East is expected to see price growth fall to 0.5% in 2016 and to -0.25% in 2017.

Price growth in the North West, Yorkshire and Humberside, Wales and the Midlands is also expected to slow in 2016.

While Brexit may be responsible for a slight dip in growth, April’s stamp duty hike is believed to have had more of an impact.

Stamp duty primarily affects the top end of the property market, and after several years of double-digit price growth expectations of future capital gain have weakened.

Highlighting the growth slowdown, Earley added: “Not all of the corrections are due to the vote to leave the EU. Stamp duty and weaker house price growth expectations, particularly in London’s prime markets, have a part to play.

“There are supports to prices on the supply side from the continuing mismatch of supply. On the demand side, ultra-low interest rates and the significant discounts available to overseas buyers resulting from the fall in Sterling will help to support prices too.”

Countrywide is a UK estate agent serving customers in 1,500 locations across more than 50 brands.

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