House price growth is forecast to slow across all regions across Great Britain over 2017 and into the first half of 2018, before returning to an annual rate of 3% in 2019.
Countrywide cites Brexit negotiations and weaker economic conditions as reasons for the hindered growth, as inflation eats into household incomes.
It expects interest rates to begin to rise "very slowly", from the spring/summer of 2018, with rising rates and a more cautious approach from lenders – partly directed by the regulator – preventing a faster increase in price as wage growth picks up.
Conversely, Countrywide says a continued lack of supply will continue to support the level of price growth.
Greater London is likely to see 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 will see price growth of 2% in 2017, followed by 4% and 5% respectively in the next two years.
Across the South East and East of England price growth is predicted to slow in 2017 to 1.5% and 3.5% respectively. In 2018 prices in these areas will rise by 2.5% and a slower 2% respectively.
The North East is expected to see no price growth this year, and to increase to 1% in 2018 and 2.5% in 2019. Price growth in the North West, Yorkshire and Humberside and the Midlands will follow a similar pattern of weaker annual price growth in 2017 and 2018, rising again in 2019.
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.
“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.”
