According to Britain’s biggest estate agent, Countrywide, house prices will fall next year by 1% next year following the vote to leave EU.
House prices in the UK will fall by 1% in 2017, with all regions affected except Scotland, where prices will stay the same, according to Countrywide.
The estate agent has said that the fall is due to the uncertainty surrounding the Brexit vote on 23 June 2016. Prices will rise 2% this year, a slowdown from last year’s rate of 6.5% and 8.5% in 2014.
Declining consumer confidence, reduced household spending power and rising unemployment is affecting the housing market, with prices predicted to begin to rise towards the end of 2017 and into 2018, at a modest rate of 2%.
Countryside said that the most expensive parts of London will bear the brunt of the slowdown, with most of the impact happening this year. Prices in prime central London including Westminister and Kensington will drop 6% in 2016, and Greater London prices will fall 1.25% next year before rising 2% in 2017.
Countrywide’s Chief economist, Fionnuala Earley, said: “Forecasts in the current environment are trickier than ever as the vote to leave the EU has thrown up many risks. Our central view is that the economy will avoid a hard landing. However, the weaker prospects for confidence, household incomes and the labour market mean that we do expect some modest falls in house prices”.
The National Association of Estate Agents said last week that other estate agents have issued profit warnings as transactions have declined and the number of house hunters fall, however housebuilders have reported demand among potential buyers reviving after a sharp fall immediately after the referendum.
Following the recent decision by the Bank of England to cut interest rates to a new record low of 0.25% this month, this prompted lenders to cut mortgage rates further from fixed rate deals which are already close to record lows.