House prices to stay flat until 2018, with growth overtaken by rents

ouse price growth will be flat across the UK next year due to economic uncertainty, according to estate agency Savills, picking up by 2pc in 2018 as the progress of Brexit negotiations becomes clear.

Savills has forecast that house prices across the UK will rise 13pc in the next five years, fuelled by a significant uptick of 5.5pc in 2019 as the negotiations to leave the EU bring certainty to the market. In London this figure is 10.9pc. This growth is forecast to be weaker than the increase in rental prices, which will rise by 19pc across the UK in the next five years, and 24.5pc in London.

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The weakest long-term house price growth levels will be in Scotland and the North East, where house prices will rise just 9.2pc during this period. The east of England is forecast to have the strongest growth, followed by the South East.

 Lucian Cook, head of residential research at Savills, said that the extension of the low-interest rate environment will mean that there are not any serious price corrections. He also forecast that the number of homes sold will tumble 16pc in the next two years, before recovering in 2021. This is due to weaker sentiment, the effects of mortgage regulation and slower house price growth.
The credit crunch and everything that followed has really affected the housing market, and Brexit will not have the same effectLucian Cook, Savills

Mr Cook said: “I think this is the realisation that we are not facing the same agenda as what happened in the credit crunch. It is not as significant or fundamental; the credit crunch and everything that followed has really affected the housing market and Brexit will not have the same effect.”

The most expensive homes in Britain will also continue to be hit by the stamp duty hikes of December 2014, which hit homes worth more than £1m.  Savills predicts house prices in the most expensive areas of London will only start rising again in 2019.

Source:http://www.telegraph.co.uk/property/house-prices/house-prices-to-stay-flat-until-2018-with-growth-overtaken-by-re/

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