Prices of houses in London and the South have declined in the years past. Home prices fell by 10.8 percent in 2015 and 3.5 percent in 2016. This year, home prices are expected to fall by a mere one percent but are expected to rise by at least two percent next year. Encouragingly, the UK’s largest and most successful estate agencies and property service groups have made a firm forecast for home price recovery.
This promising forecast is similar to the predictions of the Centre for Economics and Business Research. The CEBR estimated that home prices this year are expected to slow down but not plummet and that they will be headed for recovery next year, Brexit notwithstanding.
Nationwide, home prices are not heavily affected. The North and the Midlands are expected to fall by a quarter percent this year because of the uncertainties of the conditions in the EU. Brexit is expected to pose some economic risks, but the general opinion is that the British economy will avoid a hard landing, which will augur well for the housing market.
As expected, the vote favouring Brexit unsettled the housing market. Many estate agents reported a decline in the number of houses being sold. Homebuyers were often hesitant to make a purchase because of the uncertainties Brexit could bring to the labour market.
Even some of the nation’s best estate agents reported finding it difficult to sell homes to first-time homebuyers because of the rising deposit, which can be a tough barrier to hurdle. But most agents believe that if higher loan-to-value mortgages will be made available, many first-time homebuyers will commit.
Prime properties in central London were hit hard last year, with prices falling by as much as six percent. Recovery is expected to begin this year, and positive growth of up to four percent is likely in 2018.
The consensus is that the current decline in home prices is only temporary and will easily bounce back once the terms of the UK’s exit from the EU have been finalised.