House price growth predicted to stagnate
- Published: Monday 21 August, 2017
- Category: Housing market
- By: Andrew Pelis
- Updated: Thursday 24 August, 2017
A new review of the UK property market has predicted a fall in house price growth to the end of the year, with gradual recovery expected during 2018.
The slowdown in house price growth has been attributed to the effects of inflation on budgets, making affordability an issue for many.
As a result, the UK rental market is likely to continue to experience high demand, which could be good news for buy-to-let landlords, as more people take longer to save for the deposit to take the first steps on the property ladder.
In its report, estate agent Countrywide is predicting that average house price growth in the UK will fall to 1.5 per cent in 2017, but is likely to start to improve from the middle of next year, with the company forecasting that prices will end 2018 2 per cent higher.
This growth is anticipated to continue into 2019, when Countrywide predicts annual house price growth to reach 3 per cent.
Fionnuala Earley, Countrywide’s chief economist, said:
“Economic conditions for households will remain challenging over the next year as inflation eats into budgets and interest rates begin to rise.
“In addition, fewer landlord purchasers and the later age at which people buy, is affecting the level of demand.
“But we expect the UK economy to recover and wage growth to pick up in response to global growth. That, combined with a continued lack of housing supply, will help to support house prices.”
Andrew Turner, chief executive at Commercial Trust, commented:
“Inflation undoubtedly is affecting spending power and with fewer property transactions taking place, it is to be expected that property prices will fall.
“The question of affordability remains a key factor for home buyers – particularly first-time buyers – and in most cases, the obvious alternative is to rent for a longer period of time, to save up for a deposit.
“That represents positive news for buy-to-let landlords – and of course, with house price growth slowing, those able to afford to, have the opportunity to increase their portfolio size ahead of any price rises and lock in some low fixed rates before any hikes in interest rates.”
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.