One of the last major estate agencies to give its forecast for 2018 says London prices will drop another 0.5 per cent next year, following what it believes will have been a 1.0 per cent fall in 2017.
Knight Frank says mainstream house prices across the country will increase by around 1.0 per cent in 2018 with only the Midlands and the East of England seeing a larger rise – and then of only 2.0 per cent.
Greater London as a whole will see a dip of 0.5 per cent with a larger fall of 1.0 per cent in the area which Knight Frank describes as “prime outer London”.
“The momentum in house price growth is slowing in many parts of the country, and we expect price rises to remain muted overall next year amid increased economic and political uncertainty in the run-up to Brexit and amid more muted forecasts for wage growth” explains the agency.
“Once the Brexit deal is completed, we forecast rising momentum across the market, with price growth reflecting this in many locations … The UK may now be entering a period of interest rate rises, but even so, we expect rates to be low compared to long-term norms” it continues.
However, the agency warns that factors such as deepening affordability pressures and property taxes will “continue to weigh on pricing.”
The agency also lists possible risks to the housing market next year – highest are problems caused by Brexit and political upheaval if there is the prospect of another General Election.