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Housing market to remain subdued in 2018: Halifax

House price growth will be minimal next year, with values rising by a maximum of 3 per cent, according to Halifax’s 2018 outlook.

It predicted that growth will continue to be weakest in London and the South East.

The lenders said it expected house prices to be “broadly stable” in 2018. It said continued pressure on household finances will limit demand. However, Halifax said a shortage of homes for sale, and low levels of house building will continue to help support prices in many parts of the country.

Halifax Bank’s managing director Russell Galley says: “Overall we expect annual house price growth nationally to stay low, and in the range of 0 to 3 per cent by the end of 2018.

“The main driver of this forecast is the continuing effect of this year’s squeeze on spending power as inflation has outstripped wage growth and the uncertainty regarding the prospects for the UK economy next year.

“As for this year, annual UK house price growth has gradually fallen from 10 per cent in March 2016 to a recent low of 2.1 per cent in July 2017, although levels have recovered in recent months to around 4 per cent.”

He adds: “The inblance between supply and demand continues. On the demand side, new buyer inquiries have been weakening for much of the year.

“At a regional level, this measure has deteriorated far more sharply in London, the South East and East Anglia compared to other parts of the UK. On the supply side, new instructions had held broadly stable, however, the latest data shows the supply of homes for sale sharply deteriorating.”

With supply falling in 21 consecutive months to November, Halifax said it sees few reasons to expect any fundamental shift in housing market in the immediate future.

However Halifax said there was a more positive on the outlook for first-time buyers. It said the changes to stamp duty, announced in the 2017 Budget, should provide a boost for those hoping to take their first step on the property ladder.

Galley adds: “Today’s first-time buyers need to find an average deposit of around £33,000. If they do manage to purchase their first home, they are on average £651 a year better off compared to renting, on top of the savings they make from the duty change.

“It’s encouraging to see that the number of first-time buyers getting on the housing ladder has now exceeded 150,000 for the third time in four years – a level of momentum not seen since before the financial crisis.”

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