Rental growth is set to outpace house price rises and property sales are likely to dip by 16 per cent over the next two years, Savills has forecast.
The estate agency predicts that economic uncertainty as the UK negotiates its exit from the EU over the next two years will trigger very low house price growth, but that an extension of the low interest rate environment will prevent a price correction
It believes UK mainstream house price growth to average 13 per cent by 2021, with East of England the top performer at 19 per cent.
Savills says Brexit worries are compounding the stamp duty effect on the prime markets, resulting in two flat years for house prices before a return to trend growth in 2019.
Reduced buy-to-let lending is set to constrain investor activity as rental demand rises, meaning that rental growth will outpace house price growth.
Savills UK head of residential research Lucian Cook says: “There is no precedent for the current market and the Brexit vote makes forecasting more challenging than perhaps ever before.
“The effect of Brexit is complicating a natural shift towards the later stages of the housing market cycle, when the strongest growth is seen beyond London and the South East.
“What is clear is that the housing market does not like political and economic uncertainty and this points to a lower growth, lower transaction market across the board.”