UK house price growth is set to outstrip London for the first time in six years, says the Centre for Economic and Business Research.
The housing market analyst forecasts a 1.5 per cent rise in house prices across the UK this year, an improvement on the 0.6 per cent decline it predicted in January.
But it believes house prices in the capital will shrink by 3.6 per cent in 2015, mainly down to the potential of a mansion tax, reduced overseas interest and increased stamp duty rates for more expensive properties.
Cebr economist Nina Skero says: “Outside of London, the outlook for house prices this year has improved after a few months when the market appeared to be coming off the boil. December’s stamp duty changes, as well as rising household incomes, are lifting prices in many parts of the UK.
“In London, however, we expect prices to decline by 3.6 per cent, driven by a significant weakening at the prime end of the market. A potential mansion tax, reduced overseas interest and hefty new stamp duty rates have hit demand for high value property.”
UK prices are expected to grow by 2.3 per cent in 2016, followed by 4.3 per cent growth in 2017, 3.8 per cent in 2018, 3.6 per cent in 2019 and 4 per cent in 2020.
In London, prices are expected to return to growth in 2016, with prices forecast to rise by 2.7 per cent. Prices in the capital are then forecast to rise 6 per cent in 2017, 5.5 per cent in 2018, 3.8 per cent in 2019 and 4.7 per cent in 2020.