Property price increases in the UK began to slow down during 2017 according to the Nationwide building society.
Perhaps surprisingly, London was the weakest performing area with house prices dropping by 0.5% year-on-year.
Overall, the average house price growth in the UK during 2017 stood at 2.6%, down from 4.5% in 2016.
“Annual house price growth ended the year at 2.6%, within the 2-4% range that prevailed throughout 2017. This was in line with our expectations and broadly consistent with the 3- 4% annual rate of increase we expect to prevail over the long term (which is also our estimate for earnings growth in the long run).” Said Nationwide chief economist Robert Gardner.
“However, this marked a modest slowdown from the 4-6% rates of house price growth recorded in 2016. Low mortgage rates and healthy employment growth continued to support demand in 2017, while supply constraints provided support for house prices. However, this was offset by mounting pressure on household incomes, which exerted an increasing drag on consumer confidence as the year progressed.”
This might give some early clues to the answer to the question “will UK house prices fall?”
The Outlook For The UK Property Market In 2018
“How the housing market performs in 2018 will be determined in large part by developments in the wider economy. Brexit developments will remain important, though these remain hard to foresee.” Continued Mr. Gardner.
“We continue to expect the UK economy to grow at modest pace, with annual growth of 1% to 1.5% in 2018 and 2019. Subdued economic activity and the ongoing squeeze on household budgets is likely to exert a modest drag on housing market activity and house price growth.
“Nevertheless, housing market activity is expected to slow only modestly, since unemployment and mortgage interest rates are expected to remain low by historic standards. Similarly, the subdued pace of building activity evident in recent years and the shortage of properties on the market are likely to provide ongoing support for house prices.”
Therefore it’s certainly not all doom and gloom. At worst it looks like the property market may be in for a period of stability, where prices will remain roughly the same.
Naturally, we can expect some areas to perform better than others and London may well have come to the end of its recent boom period.