Current Slow UK House Price Growth Set To Increase

Prices should rise by over 14% cumulatively by 2022

An analysis report this month acknowledged that house price growth in the UK housing market is rising very slowly, though the speed is set to pick up next year and beyond. The slowdown is particularly noticeable in the capital, and it is being forecast that prices might even fall there before they begin to rise again.

The analysis report comes from global estate agents Knight Frank, and it reveals that the UK housing market has actually been slowing down overall since 2014, with the projected average house price growth for 2017 set to be just one percent.

A Bright Future for the UK Housing Market

Knight Frank's report reveals multiple reasons behind the recent slowdown in market activity, with the lack of available homes being a primary factor. The report states: "The shortage of housing stock available to buy coupled with ultra low mortgage rates have put a floor under pricing across the UK, but the question of affordability is becoming more pressing in some areas, especially as lenders still expect sizeable deposits from buyers.

"As the UK moves closer to Brexit, any economic uncertainty could have a knock-on impact on the housing market, especially if wage growth and employment levels across the country are affected."

Even though the growth is currently very slow, the report also predicts that prices should rise by over 14% cumulatively by 2022. Next year, projected price rises could amount to 2.5% across the UK, with further rises over 2019 bringing it to 3% by 2020. The rental sector remains healthy too with its recent steady growth set to continue. There should be a rise of 1.4% over the remainder of this year, with further rises contributing to a cumulative 9.8% increase by 2022.

Prime London Sales Well Placed to Recover

The housing market forecast also acknowledged the several years of low performance by the capital's prime market, though Knight Frank also believe a change is afoot. The report concludes: "After several years of significant outperformance, demand in the prime London sales market has been dampened by rising transaction taxes, leading to a slowdown in sales in 2015 and 2016 and prices falling 6% in the two years to March 2017 in prime central London.

"The UK's decision to leave the EU has created a degree of uncertainty, as with last week's General Election. However, with lower asking prices and the pound trading at 14% below its level before the EU referendum versus the dollar, transaction volumes are recovering. We believe prices in 2017 will end the year unchanged in prime London and the volume of £1m-plus sales in Greater London will be more than 10% higher in 2017 than 2016."

While this may seem like a lot of 'as you were' for the time being, it is another indication that the UK housing market has much brighter prospects than were being forecast last year.

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