Market defies Brexit for now - but 2017 will be 'notably slower'

Estate agency Knight Frank says that the UK housing market has rebounded more strongly than expected after the Brexit referendum - but it warns that growth in 2017 will be ‘notably slower’ than this year, with the downturn spreading beyond central London.

The agency says that on most measures the mainstream market continues to perform strongly with annual price growth likely to end the year at five per cent. Most regional markets have seen positive growth, the exception being Wales ,it says. 

“The ripple of price growth from London continued in 2016 and we expect the end of year position to be that the East of England and the South East will both see stronger growth than that in Greater London” says its official forecast for 2017.

But the agency warns that the slowdown now evident in central London will spread across Greater London. “This slowdown in the capital will likely be experienced across the rest of the country with price growth down notably on 2016 levels” it cautions.

Predictably, it says the Brexit process will impact negatively on consumer confidence in the run up to and just after invoking Article 50.

The agency says the mainstream market will see only a 1.0 per cent price rise next year, with London actually seeing a 1.0 per cent fall - bad enough, although better than the 2016 year-end forecast which for West Central London suggest prices will have dropped seven per cent over the 12 month period.

In the period from 2017 to 2021, Knight Frank says UK mainstream prices will have risen some 14.2 per cent overall - best performing region during this time will be the East of England (up 18.1 per cent) and worst performing will be Wales (up only 8.8 per cent).

The UK rental market looks relatively positive with modest rental growth expected. Rents could rise further if landlords begin to sell properties in an effort to offset to the impact of tax rises, Knight Frank suggests.