The growth in house prices in the UK will slow to 2.5% by the end of 2016 because of the economic risks and uncertainty due to the turmoil around Brexit, according to a new survey released by propertywire.com
Given the slowdown in growth in 2016 prices, next year may fall by 1%, but the market will recover in 2018, expanding by 2% states an analysis of Countrywide.
According to the report, although the growth will slow down in all regions, the price growth in London is likely to be more severely affected – it will shrink to 3.5% in 2016 before falling to 1.25% in 2017. In 2018 will, however, restore to 2%.
It is expected that the market for luxury homes in central London to be hit hardest as prices will fall by 6% in 2016, rising to 0% in 2017 and 4% in 2018.
The report states that the vote to leave the EU has shaken the British economy because of the uncertainty surrounding the agreements on the separation from the EU and their effects on trade and future economic growth.
The company expects a weakening of the economy, which will affect the prices and transactions by consumer confidence, household income, and labor market. This, however, is not the only factor that will influence the direction of prices.
The report also says that the higher stamp duty continues to take its toll from the market for luxury homes after several years of double-digit price growth, expectations of future capital gains change in the downward direction in many areas, which leads to a weaker demand.
Prolonged lack of supply of properties and very low interest rates on loans will, however, continue to support house prices. The expected price decline in 2017 will mean that prices will return to levels similar to those of the first quarter of 2016