The projections came from the Centre for Economics and Business Research (Cebr), which said it has downgraded its short-term house price expectations because of Brexit.
Cebr also said it anticipated that price growth will halve in the rest of 2016, as Brexit uncertainty takes hold and that London would be most affected. It said that while the average house price in the capital is expected to increase by 6.8% this year, it would fall 5.6% the following year. However, it added that despite “Brexit tremors”, house prices are set to increase by 5.7% over 2016 as a whole.
Looking at the medium and long term, Cebr predicted that housing market performance will depend heavily on the economic and immigration policies agreed during the UK’s exit negotiations with the European Union.
Cebr also said that in the medium term it expects house price growth to pick up, as negotiations progress and a clearer picture starts to emerge, of how the UK will look, post Brexit. It said that it expects the negotiations to progress “relatively smoothly” and that the outcome will be a continuing close relationship with Europe, without having to agree to an unrestricted flow of labour or goods and services.
The Centre also pointed out that the property market was beginning to decline prior to the decision to leave the European Union.
Nina Skero, Cebr senior economist said despite the shockwaves of the Brexit vote result she does not expect the housing market to plummet.
“Years of under building mean that demand would have to fall very dramatically to meet the low level of supply increases.”
She added: “Therefore, Cebr expects London prices to grow by 6.8% in 2016, but fall 5.6% in 2017 before returning to growth in 2018 and beyond.”