Brexit uncertainty and weakening consumer demand are likely to hit house prices this year, according to a survey of 33 housing market specialists by news service Reuters.
They forecast that average prices will rise 2.0 percent this year, below the 2.5 per cent inflation forecast. However, in London prices will drop by 0.5 per cent, they suggest.
Next year, house prices will rise 0.9 percent in London and 2.0 nationally, still both below the 2.1 per cent expected inflation rate. In 2020, London prices will increase 2.0 per cent and by 2.3 per cent nationally.
Reuters, quoting some of the experts polled, cits Rod Lockhart of mortgage lender LendInvest saying: “A significant effect of Brexit is subdued investment confidence. Would-be sellers are holding onto assets for longer and buyers are being a little more diligent before committing to significant expenditures, all this against a backdrop of inflation-surpassing wage growth.”
Brexit uncertainty has also deterred overseas buyers with Tony Williams of property consultancy Building Value saying: “Foreigners get more pounds in their pockets, but the nation and its capital has lost some of its allure.”
The number of transactions is predicted to be around the same as in 2017, while when asked to rate house prices on a scale of one to 10 - where one is extremely cheap and 10 extremely expensive - respondents gave a median of nine for London and seven nationally.
“Quite simply, with loan-to-income ratios for first time buyers sitting at around four times, average salaries of £33,000 and your average flat in London costing over £500,000 it’s extremely difficult to see how London can be viewed as anything but very expensive” Lockhart says.