With the latest figures showing a 2.5% year-on-year increase in average UK house prices, estate agent Savills predicts a slowdown next year, and a fall in London.
Brexit uncertainty will cool the market, leading to low transactions and growth in 2018, according to estate agent Savills in their residential property report.
Overall across the UK, house prices are only forecast to rise by 1% – this is based on average prices in the second-hand market, so does not take new-builds into account.
In London, the report predicts house prices will fall by -2%, which is partly down to sensitivity over the current political and economic uncertainty, and the lack of affordable homes for ‘ordinary people’.
Katy Warrick, head of London research for Savills, said: “The capacity for further house price growth in London is limited, with mortgage regulation doing exactly what it was intended to do. It is holding back borrowers from taking on excessive levels of debt in an attempt to chase the market. This has slowed the market to prevent it from overheating.”
Meanwhile, the 2018 forecast for the north of England and Scotland is slightly more positive, although still modest with gains of 1.5% expected for the year.
While Manchester has been one of the strongest northern markets, investment could spread to areas like Leeds and Liverpool as people look for higher rental yields.
The prime market, which consists of the most “desirable and aspirational property by reference to location, standards of accommodation, aesthetics and value” is also expected to slow down in 2018.
For buyers looking for a more affordable stock of large, prime properties than those on offer in the home counties, the northern county of Cheshire could see a rise in popularity.