Asking prices for real estate has been on the rise in the past six years, save for 2016. The move by the UK to get out of European Union has cast doubts on the possible changes in prices of real estate. Terms of Brexit are not yet known but are expected to be out on or before 2018. Till then, London house prices forecast are expected to be very erratic.
Apart from Brexit, house prices in London are affected by this new trend of Londoners to move from the city centre to outer boroughs and other towns outside the city centre. The move is triggered by a progressive increase in house prices that have is well known in London city centre area in the past few years. House prices in outer boroughs of London, also known as zone 2, are expected to grow by 1% above the UK house prices of 2017. This is a simple response to the increase in demands of houses in these parts of London. Increased prices are meant to offset the surge in demand for housing in the outer boroughs.
Meanwhile, house prices in the London are expected to fall due to the rapid decline in demand. Prices in the city centre are expected to fall by 5% in 2017. Such decrease in house prices is projected to affect many parts of the UK. Real estate agents are not willing to sell at the low prices. Supply of real estate is still tight. As at the end of 2016, the available property for sale is down by 5% per agent.
Absurd changes in house prices begun in 2016. After a steady five-year rise in prices, the house prices fell dramatically in 2016. This was expected from the moment Britain signed a referendum to get out of European Union. House prices have been oscillating since then. Many economy researchers and other stakeholders have projected possible scenarios that the house prices will take in the next two years. One thing about these predictions is that they all show a common trend of increase or decrease. They only differ in how much house prices will grow or fall.
One of the real estate stakeholders to forecast on price trends is the Savills Estate Agents. Savills foresee buyer reticence in the next two years. Sellers will also withdraw most of their commodities from the housing market until maybe 2018. This will result in zero price growth in 2017 followed by 2% increase in 2018. Savills also foresee a 16% fall in the number of homes that will sell in the housing market in 2017. The number of homes changing hands will fall further in 2018. This fall in property sales can be because of the increase in the upfront cost of rental properties due to the introduction of stamp duty surcharge in April 2016. A decrease in tax relief that landlords can get from mortgage payments is also a cause for the fall. The general trend in house prices as forecasted by Savills is also corroborated by other reputable real estate stakeholders.