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.
She added: “The housing market is sensitive to confidence which will be affected by the outcome of Brexit negotiations and the implications this will have – particularly on employment.”
The prediction contrasts with one from Oxford Economics earlier this month which expects house price rises to remain stagnant until 2021.
These average price predictions mask wide regional disparities, as shown by the table below:
Countrywide predicts that Greater London is likely to see average price growth slow to 0% in 2017 before rising by 2.5% in 2018 and 4% in 2019. After two years of falls, Prime Central London (PCL) will see price growth of 2% in 2017, followed by 4% and 5% respectively in the next two years.
The poorest average house price growth is predicted to be in the North East with prices flat this year, rising 1% in 2018 and 2.5% in 2019.