House prices to fall 1% as market bears the brunt of Brexit


House prices are expected to fall 1 per cent next year due to post-Brexit economic fallout, according to Countrywide.

The property group says house price growth will weaken in the second half of 2016 in all regions except Scotland.

It is forecasting that house prices will only rise 2 per cent this year, compared to growth of 6.5 per cent in 2015 and 8.5 per cent in 2014.

Countrywide predicts the housing market will be hit by falling consumer confidence, reduced household spending and increasing unemployment levels.

High stamp duty is also expected to play a part.

Countrywide says: “The vote to leave the European Union has unsettled the UK economy as uncertainty surrounding the arrangements for decoupling from the EU and the effect this will have on trade and future economic growth.”

It expects house prices to rise towards the end of 2017 at a rate of 2 per cent, and for this to continue into 2018.

Prime property prices in central London are forecast to fall 6 per cent this year. Meanwhile greater London prices are expected to fall 1.25 per cent and then rise 2 per cent in 2017.

Countrywide chief economist Fionnuala Earley says: “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 the economy will avoid a hard landing.

“However, the weaker prospects for confidence, household incomes and the labour market mean that we do expect some modest falls in house prices.”