House prices in the UK are set to rise by 2% in 2017 as growth is held back by uncertainty around Britain’s decision to leave the European Union, according to a poll of housing analysts.
However, prices in London are set to see a small decline of 0.5% before recovering in 2018, says the results of the monthly Reuters UK house price poll which involved key organisations such as Knight Frank, the Nationwide, the Council of Mortgage Lenders, Savills, and eMoov.
This month’s report points out that in the poll taken ahead of the June referendum, house prices were expected to rise at around 4% next year, based on an assumption Britain would vote to remain a member of the EU.
None of the respondents to an extra question in this month’s poll said their opinion on the future of Britain’s housing market had improved since the referendum while eight said there was no change. Eleven said it had got worse and one said a lot worse.
For 2018, views were nonetheless mostly revised up in the broader poll of 25 economists, estate agents and brokers. They forecasted house prices across the country will climb 2.7%, just a bit faster than the 2.4% prediction made in the August poll.
It is likely that any downside for house prices will be limited markedly by a shortage of houses for sale, according to Howard Archer at IHS Markit.
The report points out that last week high end London builder Berkeley revealed that demand fell 20% in the first half of the financial year due to a property tax hike and the Brexit vote.
Meanwhile, domestic buyers have benefited from record low borrowing costs and mortgage approvals were stronger than expected in October.
‘With low interest rates expected to continue for an extended period, it will continue to make mortgages very affordable on a monthly basis,’ said Ray Boulger at mortgage broker John Charcol.
‘But for first time buyers without family help, the biggest barrier to home ownership will continue to be finding the deposit and associated costs,’ he added.
The poll also asked for opinions on what impact the housing measures announced in the Autumn Statement would have on the market. The lack of actions to back up Government words seems to be recognised across the industry, with 60% believing there would be no impact and the rest thinking there would only be minimal impact.
Russell Quirk, chief executive officer eMoov, said it should not be a surprise that many believe the EU vote to have been detrimental, whether that be due to scaremongering across the industry or because it suits personal agendas.
‘Structurally nothing has changed and so I believe there has been little change to the market and this will continue for the time being. I do believe the London market is a lot softer now, but the Brexit vote has only had a minor contributing factor to this. The real killer blows of 2016 where London is concerned have been the changes to stamp duty,’ he added.