House prices to keep on rising... but half as quickly

First-time buyers will still struggle to get on the property ladder


House prices will continue rising in 2017 but growth is set to slow to 3%, according to a report.

The forecast from the Royal Institution of Chartered Surveyors (RICS) shows a marked slowdown on house price growth this year, which it says is on course to end 2016 at about 6.5%.

A chronic shortage of supply will also see transactions drop to between 1.15 million and 1.2 million from about 1.25 million in 2016, the report shows.

But first-time buyers will continue to struggle to get on to the property ladder as the predicted 3% rise in prices continues to leave home ownership out of reach for many.

RICS also believes rent will go up by 2% to 3% across the UK in 2017.

Simon Rubinsohn, RICS chief economist, said: "Although recent announcements by the Government on housing are very welcome, the ongoing shortfall of stock across much of the sales and lettings markets is set to continue to underpin prices and rents.

"As a result, the affordability challenge will remain very much to the fore for many."

RICS predicts that East Anglia, the North West and West Midlands will see gains above the national average during 2017.

Prices in Central London will stabilise after a tough 2016 as the plunge in the pound's value since the Brexit vote sparks a buying spree by foreign investors, RICS adds.

Britain's housing market has been affected this year by changes to stamp duty, which has made the tax more expensive for some people buying top-end homes, while it was increased in April for buy-to-let investors.

This is thought to have affected the London market in particular.

RICS said 2017 would see more major changes, with the Housing White Paper set to be a "defining moment" in January, as well as the proposed ban on letting agent fees.

Jeremy Blackburn, head of policy at RICS, said: "The unintended consequences of such a blunt policy will also be a strong feature of the year ahead."

10 property hotspots

10 property hotspots