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Monday 21 August 2017
Price growth to slow to 1.5% in 2017, but increase to 2% in 2018
As Brexit negotiations continue, confidence will be volatile which will have implications for the pace of economic and housing market recovery. The outcome of these negotiations is the biggest risk to performance and is weighted to the downside.
Despite little recovery in the levels of housing transactions - due to affordability issues and fewer buy-to-let purchases - the rate of new building is not expected to gather enough pace over the next two years to catch up with previous shortfalls. A lack of supply will therefore continue to support
the level of price growth.
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.”
<Insert - Table 1 – Countrywide Housing Forecasts – Annual house price growth (%)>