House price inflation 'to be modest in 2018'

by Gary Whittaker

UK house price inflation is set to range from zero to three per cent in 2018, Halifax has predicted.

The mortgage lender has forecast that 'continuing broad stability' will be the general picture for the year ahead, against a background of low unemployment tempered by modest economic growth, and ongoing strains on household finances that will bear down on affordability. 

It said prices will be boosted by an ongoing shortage of availability and low interest rates, while the recent trend for price growth to be lowest in London and the south-east will continue. 
Russell Galley, the bank's managing director, said: "The UK housing market in 2017 followed a similar pattern to the previous year. House price growth has slowed, whilst building activity, completed sales and mortgage approvals for house purchase have all remained flat. 

"This is driven by a combination of the continuing uncertainty regarding the future of the UK economy, and the ongoing challenge for prospective buyers to build up the appropriate deposits to support purchases."

However, he said, last month's rate rise is not likely to have a major impact and it is probable any further increases in the cost of borrowing in 2018 would, if it happens at all, occur only late in the year.

The continuation of the broad patterns of 2017 may persuade property investors to keep looking at the specific trends for various areas and regions for the best prospects. 

That may mean, for example, steering away from London and the south-east while that part of the country remains a cooler part of the market, and looking towards some of the areas where economic growth or infrastructure investment is high, such as the West Midlands and the 'Northern Powerhouse' area. 

Indeed, the survey indicated the north has seen much stronger price growth than the south this year.

A study by the House Shop recently found that London had declined as a rental market, but remains the most in-demand city. 

Birmingham came second, with the rest of the top five made up of Bristol, Leeds and Manchester.

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19-December-17General Lettings News