Countrywide says Brexit means house prices will dip in next 18 months

Stamp duty, especially in London’s prime markets, will also play a role in driving down home prices, Countrywide explained.

Greater London is likely to see price growth slow to 3.5 per cent in 2016 before a fall of 1.25 per cent in 2017 and a recovery with prices growing two per cent in 2018.

House prices in Central London’s most exclusive neighborhoods are set to drop 6% this year on the back of the Brexit vote and a double whammy of higher sales taxes.

Prices will fall by 1% in 2017 after weakening in the second half of this year with all regions affected except Scotland, where prices will remain unchanged, according to Countrywide.

Fionnuala Earley, chief economist at Countrywide, said: ‘Our central view is that the economy will avoid a hard landing, which is good news for housing markets.

“The vote to leave the European Union has unsettled the United Kingdom economy”, Countrywide chief economist Fionnuala Earley said by phone.

Countrywide, which has more than 1,500 branches across the United Kingdom, said prices will start rising again at a modest rate of 2 per cent in 2018.

The average Birmingham property increased by 7.9 per cent in the year up to the Brexit vote, to £136,429, according to Rightmove.

In its latest forecast, the agent said: “To put the price falls we expect in 2017 into context, they will mean prices returning to levels similar to Q1 2016”.

Despite this, record-low mortgage rates and limited housing supply will continue to prop up house prices.

The forecast comes after it emerged house prices were being cut by almost 10 per cent in high-end parts of London such as Kensington and Chelsea.

“On the demand side, ultra-low interest rates and the significant discounts available to overseas buyers resulting from the fall in sterling will help to support prices too”.

The firm says that future house price growth will be dominated by the UK’s negotiations with the EU.

Countrywide, which has more than 1,500 branches nationwide, stressed that that its forecasts could change because of the “extraordinary nature of the challenges ahead” in negotiating the terms of the UK’s departure from the EU.

“An orderly exit is in the interest of the remaining European Union members and indeed global economies”.

However, while the property website said the Brexit vote had knocked sentiment, it added that the month-on-month decline in asking prices was in line with the traditional summer lull.