House price rises will slip behind inflation this year by half a percent across the UK and 1.6% in London, it has been predicted by over 30 leading property market experts.
News agency Reuters, which polled the unnamed experts last week, says continuing worries over Brexit and weak consumer spending will subdue house price rises and investment confidence in the property sector.
“Would-be sellers are holding onto assets for longer and buyers are being a little more diligent before committing to significant expenditures, all this against a backdrop of inflation-surpassing wage growth,” says Rod Lockhart of online mortgage firm LendInvest (pictured, left).
Reuters says a majority of the experts it polled believed that the effect of the UK’s planned exit from Europe on London had been to decrease sales turnover, but that the picture was less clear nationally.
Eleven of the 18 experts who answered the question on property sales said London’s turnover would decrease this year, driven by huge affordability problems, Brexit but also the government’s tax-hikes for landlords.
“Quite simply, with loan-to-income ratios for first time buyers sitting at around four times, average salaries of £33,000, and your average flat in London costing over £500,000, it’s extremely difficult to see how London can be viewed as anything but very expensive,” says Rod.
Brexit’s softening effect on London’s property market comes despite Sterling being 6% weaker than before the Brexit vote, which has made the Capital’s homes more attractive to foreign buyers.
“Foreigners get more pounds in their pockets, but the nation and its capital has lost some of its allure,” said Tony Williams at property consultancy Building Value.
“Given stretched income/price levels and lack of supply in London especially – plus macroprudential attempts to rein in buy-to-let – it is difficult to see turnover doing anything other than fall,” said Marcus Dewsnap at research firm Informa Global Markets.