New forecasting from economists at Lancaster University Management School indicates the UK housing market will remain stable as house price inflation slows to 3.5%.

Despite some economists predicting a price crash in 2017, the two main factors responsible for the positive forecasted growth in the housing market are (i) the sound domestic economic conditions (mainly a healthy growth rate of consumption), and (ii) the fall in the real mortgage rate (mainly due to the recent rise in inflation rate).

Key Predictions

  • For the UK national market, the forecasting models predict a slowdown in the rate of house price inflation to 3.5% in 2017 (in 2016 it was 4.4%).
  • According to the forecasting results, housing inflation in London will slow down in the first quarters of 2017,
  • Growth in property prices is predicted to build up towards the end of the year.
  • The forecasts indicate a 3.9% growth in London property prices in the course of 2017.
  • Outer Metropolitan, Outer South East and South West. The property market of East Anglia, which is currently growing faster than any other regional market of the country, is predicted to slow down in 2017.
  • The forecasts suggest that house prices in this region will grow by 5.7% over the year.
  • The UK Housing Observatory is a project of the Economics Department at Lancaster University Management School (LUMS) aimed at improving our understanding of the UK national and regional housing markets.