Sluggish economy to hit house price growth this year

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The sluggish economy will serve as a brake on house price growth as inflation tears household earnings this year, the UK’s largest estate agent has determined.

By the end of 2018 prices will have improved, and will continue to progress into 2019, the news from Countrywide states.

The agent’s yearly housing market estimate said that it anticipates house price growth to decline to 1.5pc this year, having been 5pc last year.

Greater London will be severely hit in the following months, with growth in prices anticipated to slow to zero, although prices will increase slowly over the country.

The slow growth will be intensified as families spend less, depressing the economy entirely.

While the more stagnant market is expected to continue for the first six months of 2018, by 2019 growth will have recovered to about 3pc yearly, Countrywide has estimated.

Increasing interest rates sometime next year and rises in pay will help families to recover, although price increase will be held back slightly by a more careful strategy from lenders.

“As Brexit negotiations continue, confidence will be volatile which will have implications for the pace of economic and housing market recovery,” Countrywide’s article read.

The estate agency, which on 2016 marketed more than 60,000 houses, also announced the rate of new building is not seen to have enough speed over the next two years to make up for the previous shortcomings, and so a shortage of supply will continue supporting the level of price increases.

Countrywide’s chief economist, Fionnuala Earley, stated that as far as economic conditions are concerned, “fewer landlord purchasers and the later age at which people buy is affecting the level of demand.”

She continued: “But we expect the UK economy to recover and wage growth to pick up in response to global growth. That, combined with a continued lack of housing supply, will help to support house prices.”