Will UK house prices rise or fall next year?

With the impact of the Brexit vote still yet to be determined, will UK house prices rise or fall in 2017?

Britain’s biggest estate agent Countrywide has forecast that prices will fall by 1 per cent, following weakening values in the second half of 2016. All regions of the UK will be affected, predicts Countrywide, except for Scotland, where prices will stay the same.

The company attributes its anticipated decline to the weakening economy, caused by uncertainty surrounding the Brexit decision, with values expected to rise 2 per cent over the whole of 2016, slower than 2015’s 6.5 per cent growth and 2014’s 8.5 per cent.

Countrywide singles out prime London as bearing the brunt of the slowdown, with prices in areas such as Westminster and Kensington predicted to drop 6 per cent in 2016.

Fionnuala Earley, Countrywide’s chief economist, commented: “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.”

On the other hand, though, CBRE has published its own, more positive predictions for the housing market, anticipating house prices to rise by an average of 3 per cent in 2016. Outer London prices in the year to June 2016 rose 12.4 per cent, while inner London prices jumped 9.9 per cent. Only the North of England saw prices decline – by 1 per cent year-on-year.

Jennet Siebrits, head of residential research at CBRE, said the Brexit vote’s short-term turmoil had not shaked “very stable economic foundations”.

“There are now encouraging signs of growth becoming more broad-based and coming from multiple sectors,” she commented.

“London and the UK are still robust investment regions with a strong and established legal structure, favourable time zone, world-class education system, and a durable, settled, democratic political structure.”

They join an increasingly mixed picture, painted by a raft of different reports. According to the National Association of Estate Agents, the number of house hunters in the UK has fallen by a third. According to some housebuilders, demand has rebounded. First-time buyers, meanwhile, “dominated” the prime London property market in Q2 2016, accounting for more than a third of purchases, according to Marsh & Parsons.

The consensus, though, appears to be broadly upbeat in the medium-term and long-term, with Countrywide forecasting a rise in prices towards the end of 2017, with 2018 seeing price growth return to this year’s 2 per cent. Greater London, meanwhile, is predicted to fall 1.25 per cent in value, before rising 2 per cent in 2017.