London, south east to weigh on 2018 UK house price growth
Price growth in Northern Ireland, Scotland, Wales and the north west of England next year will be offset by a slowdown in London and the south east of England.
"It seems the overriding issue of supply will again be the prominent theme when looking at the likely behaviour of the housing market over the course of 2018," said RICS.
A lack of supply is perceived as the greatest challenge in need of addressing, it said, but the measures announced in the 2017 UK budget, such as building 300,000 homes a year, are not due to come into effect until 2019 and 2020.
The saving on UK Stamp Duty may help first-time buyers borrow more, but is unlikely to significantly change demand, RICS said. UK Chancellor Philip Hammond in November abolished stamp duty for first-time buyers on properties worth up to GBP300,000.
However, RICS said many of those benefiting from the relief would have purchased the property regardless, and so will not represent additional demand. Furthermore, "previous experience" suggests the reduction in tax will be instead be capitalised in house prices.
Survey evidence suggests the near-term outlook for activity is muted, with the RICS New Buyer Enquiries indicator falling back "quite noticeably" going into the final quarter of 2017. While the negative trend has diminished to some extent in the November survey results, RICS said this still suggests momentum across the housing market will be lacking as 2018 commences.
A lack of supply, higher price points, political uncertainty and the Bank of England's November rate hike are likely to continue to weigh on consumer caution. The body for surveyors said its central case is for house transactions to total roughly 1.15 million in 2018, a decline of around 5% compared to just over 1.2 million in 2017.
RICS said it predicts activity will fall slightly next year, and house prices across the UK as a whole at the end of 2018 will be flat on the year before.
The flat price growth will be driven by rises in some areas, such as Northern Ireland, Scotland, Wales and the north west of England, but offset by a pullback in others, namely London and the south east of England. ■