Property prices in Britain are set to lag behind inflation this year and in 2019 and are expected to fall in London, according to a poll of property market experts.
Brexit will hold housing market growth back with prices rising overall on average by 1.7% nationally in 2018, the data from the quarterly poll by Reuters shows, less than the 2.5% forecast for inflation.
The research suggests that prices in London will fall by 1% this year and the report says that this would be the first annual decline in the capital city for almost a decade.
It explains that Sterling is down around 10% against the dollar since Britain voted nearly two years ago to leave the European Union, making properties cheaper for overseas investors but generating prolonged ambiguity over Brexit talks that has made buyers wary.
It suggests that next year that house prices will rise 2% nationally and nudge up 0.5% in London while in 2020, they are forecast to increase 2% in both markets. But not everyone is agreed. For example the range of forecasts for London prices this year varied from a fall of 6% to a rise of 2.5%.
‘There is a lot of uncertainty in the market as to where we are with Brexit negotiations. That has really kept a lid on further growth. There is a wait and see attitude. We will see a slightly better performance in 2019 as the pressures between supply and demand really start coming together,’ said Oliver Knight, associate at estate agency Knight Frank.
The report also says that a lack of clarity on how post-Brexit Britain will operate will impact on the housing market. Almost half of respondents said that they think demand in London’s housing market will decrease over the next year.
The most common reason cited was Britain’s decision to leave the European Union, which is due to take effect at the end of March next year. Other reasons given included changes to house sale and mortgage taxes.
‘There is evidence to suggest that the phasing out of mortgage tax relief for buy to let owners has hammered the market. This will let some much needed air out of the market, particularly in London and the south east,’ said Peter Dixon, an economist at Commerzbank.
The report also points out that house builder Crest Nicholson has lowered its full year operating margin forecast in May to the bottom end of its previous range. ‘Now that we are one year pre-Brexit, it is entirely plausible that due to the combination of uncertainties, some buyers may think why not wait another year and see how life is going to look,’ said chief executive Patrick Bergin.
