The average price of a home is still expected to be £44,000 higher in five years’ time despite the uncertainty caused by Brexit, according to economic forecasters.
However, the pace of growth in property values will more than halve during 2017 as jitters over a “hard Brexit” help to dampen the market, the Centre for Economics and Business Research (Cebr) predicts.
London and the top end of the property market will be hit particularly hard by the cool-down according to the report, with house prices there expected to dip by 5.6% next year.
Across the UK, the typical property value stands at about £210,000, with prices expected to have increased by 6.9% during 2016.
In 2017, annual price growth is set to be weaker, at 2.6% as the UK economy navigates “challenging times”, the report says, although price growth is expected to pick up to 4% by 2018.
By 2021, the average property is expected to be worth £254,000 - £44,000 more than it is now.
Cebr said that before the vote to leave the EU in June, activity in the housing market had already been slowing, following a stamp duty increase for buy-to-let investors on April 1.
Its report said: “For consumers, we expect rising inflation and increasing unemployment to squeeze disposable incomes. Weaker business investment is likely to weigh additionally on economic growth. Taken together these factors will have a dampening effect on the housing market in the coming year.”
While weaker demand might ease some upward pressure on house prices, the supply of new homes coming to market could also be affected - which could force prices higher.