Brexit is set to weaken the wider economy and will lead to a small house price dip of one per cent in 2017 before recovering to show small levels of growth in 2018.
That is the view from Countrywide’s chief economist Fionnuala Earley.
She says house price growth is expected to slow to 2.5 per cent by the end of this year and then to dip one per cent down in 2017; then it will rise again, by two per cent, in 2018.
Greater London is likely to see price growth slow to 3.5 per cent in 2016 before a fall of 1.25 per cent in 2017 and a recovery with prices growing two per cent in 2018. Prime Central London, however, will be particularly badly hit - prices are forecast to fall by six per cent in 2016, remain stagnant next year and then rise four per cent in 2018.
Across the South and East of England price growth is also expected to slow in 2016 followed by small price falls in 2017 before returning to positive price growth the following year. Prices in the South East will dip next year.
Countrywide says the Brexit vote has unsettled the UK economy as uncertainty surrounding the arrangements for decoupling from the EU and the effect this will have on trade and future economic growth.
In addition to this, higher stamp duty continues to hit the higher end of the market the agency group says.
“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” says Earley.
She says the continuing lack of supply of property and very low borrowing rates will remain supportive factors for house prices.