House prices to stagnate in 2018, Rics predicts

National house price growth will grind to a halt in 2018 as transactions fall and economic and political uncertainty weigh on confidence, the Royal Institution of Chartered Surveyors has predicted.

Prices will rise in some parts of the UK, including the North West of England, Scotland, Wales and Northern Ireland. But prices are likely to keep falling in London and other parts of South East England, leading to a stagnant national picture, Rics predicted.

Sales volumes will just exceed 1.2m in 2017 but will struggle to reach that level next year. Rics said uncertainty over the economic outlook had reduced confidence and that household finances are stretched, making big purchases difficult. Lack of supply will help prevent price falls at a national level, Rics said.

Rics prediction is at the gloomy end of forecasts for the housing market in 2018. Halifax, Britain's biggest mortgage lender, has said prices will rise by 0-3% while Rightmove, the property website, has predicted a 1% rise. Howard Archer at the EY Item Club has forecast prices rising 2-3%.

Tarrant Parsons, an economist at Rics economist, said: “Following a pretty lacklustre finish to 2017, the indications are that momentum across the housing market will be lacking as 2018 gets underway. With several of the forces currently weighing on activity set to persist over the near term, it’s difficult to envisage a material step-up in impetus during the next twelve months.

"A real lack of stock coming onto the market remains one of the biggest challenges, while affordability constraints are increasingly curbing demand in some parts. Given these dynamics, price growth may fade to produce a virtually flat outturn for 2018.”

The housing market has slowed sharply in the second half of 2017 as concerns about Brexit and squeezed family finances have dented consumer confidence. The cost of stamp duty is also deterring purchases and the government's announced cut in duty for first-time buyers will not offset higher prices, Rics said.