House prices set to stall, but will lift again in next 2 years

House prices set to stall, but will lift again in next 2 years [Photo: apomares via iStock]

House prices in the UK have been pretty resilient since the country's electorate voted to leave the European Union (EU) in June, with the disastrous conditions many predicted for the market yet to have come to fruition. 

And according to new predictions, it is this doggedness in the face of adversity that will see the property sector continue to fight back over the course of the next two years. Analysis from Countrywide suggests that the political factors at play in the UK will force downward pressure on the market in the next few months, but said that even if prices fall now, they will come back in the not too distant future. 

By the end of this year, Countrywide predicts, we will still be seeing positive growth in the price of homes nationwide, but this will be slower than in recent years. For 2016 as a whole, it predicts a price rise of around 2.5 per cent. 

However, next year will be a more difficult prospect for the market as a whole, and nationwide we may see prices stall, falling by just one per cent, but heading downwards for the first time in years nonetheless as Brexit and the weaker economy it has brought on starts to affect the sector.

But it is the way that the property sector will respond to this that should give buyers hope for the future of the market. Although it will again face adversity in 2017, the underlying health of the market should mean it comes roaring back in 2018, and Countrywide predicts that it will see prices head upwards by more than two per cent in that year as the Brexit effect starts to diminish. 

"Forecasts in the current environment are trickier than ever as the vote to leave the EU has thrown up many risks. Our central view is that the economy will avoid a hard landing, which is good news for housing markets," said Fionnuala Earley, Countrywide’s chief economist.

"However, the weaker prospects for confidence, household incomes and the labour market mean that we do expect some modest falls in house prices before they return to positive growth towards the end of 2017 and into 2018," she added.