UK house-price inflation will slow in 2017 as affordability stretches potential buyers, according to the Royal Institution of Chartered Surveyors.
Values will rise just 3%and the number of transactions will see a moderate decline, RICS said in a statement on Wednesday. That compares with a year-on-year price increase of 6.9% in October, according to the most recent official data published by the Office for National Statistics.
The forecast underscores the recent loss of momentum in Britain’s housing market after low borrowing costs and a lack of properties for sale pushed up prices to all-time highs and out of the reach of many first-time buyers.
The supply shortage means the average number of properties on realtors’ books is close to a record low, supporting the outlook for values, RICS said.
“The ongoing shortfall of stock across much of the sales and lettings markets is set to continue to underpin prices and rents,” Simon Rubinsohn, chief economist at the group, said in the statement. “As a result, the affordability challenge will remain very much to the fore for many.”
Property prices in the English regions of East Anglia, the North West and the West Midlands are likely to outperform the national average, RICS said. Values in central London should stabilise after recent declines as a weaker pound encourages overseas buyers.
Housing transactions will fall to between 1.15 million and 1.2 million next year, compared with an estimated 1.25 million in 2016, according to the RICS forecasts.
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