The Halifax says house prices across the UK will rise between 1.0 and 4.0 per cent in the next 12 months – down on the 2016 increase but a stronger performance than many other forecasters suggest.
Martin Ellis, the Halifax’s housing economist and author of its monthly price index, suggests that what he calls the “relatively wide range” of the prediction is because of the high degree of uncertainty regarding the prospects for the UK economy next year.
He says Brexit uncertainty. possible pressure on employment and risks associated with inflation will join with affordability issues to reduce the potential for buyers to commit to moving home.
However, Britain’s ongoing housing shortage – both of new build homes and stock with estate agents – should keep prices relatively buoyant.
Many other forecasts for 2017 have put a 2.0 per cent rise as the highest – some pundits have suggested no price change at all.
“House price growth started 2016 very strongly with the annual rate rising to a peak of 10.0 per cent in March and quarterly price growth reaching 3.0 per cent in February” says Ellis.
“A steadily growing economy, with increasing employment and strengthening household finances, has supported housing demand during 2016. Very low mortgage rates, which have fallen further over the year, have also assisted” he continues.
“The housing market is critically dependent on how the wider economy evolves. We consider it most likely that the UK economy will soften over the course of 2017. This is most likely to result from the weakening of sterling pushing up import costs and dragging on purchasing power, both for consumers and as a determinant of business investment spending.
“Slower economic growth in 2017 is likely to result in pressure on employment with a risk of a rise in unemployment. This deterioration in the labour market, together with an expected squeeze on households’ spending power – as inflation picks up and outpaces earnings growth later in the year – is likely to curb housing demand.
“These factors, combined with increasing affordability constraints, particularly in London and the South East, are likely to result in a further easing in annual house price growth during the coming year, continuing the trend seen since the spring of 2016.”
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