Following the Brexit vote, the period of negotiations with the EU is likely to be a rollercoaster of confidence, with volatile sentiment indicators, lower levels of investment, and underlying uncertainty.
The housing market has undoubtedly been forced to change gear, and so against this new backdrop, how do we expect house price growth across the country to change over the next 5 years?
For starters, we expect low interest rates to protect the market from correction, but we look set for two years of low to zero growth as Brexit negotiations proceed. Greater economic clarity should then boost consumer confidence and allow for some price growth. However, this will be limited by interest rate rises, particularly in markets where affordability is already very stretched.
Over the five years until the end of 2021, the strongest growth is likely to be seen away from London where rising prices have led buyers to stretch their borrowing levels. The highest growth will be seen in the East and South East.
Further from the capital, in more affordable markets such as the Midlands, Wales and Northern England, there is more capacity for house price growth, but most lack the economic catalyst to unlock this potential. However, hot spots such as Manchester and other key cities with more economically active markets, could buck the trend and prompt house price growth to outperform the regional average.
Scotland is likely to continue to see price growth in line with Northern England, with the strongest growing markets focused in the central belt. Aberdeen, which showed the strongest post-credit crunch growth, will be a drag on the national numbers as long as oil prices continue to remain low.
Our interactive map below shows the predicted mainstream trends over the next five years by region, underlining the diverse nature of the UK housing market: