House prices will rise just one per cent on average next year a new report by property firm JLL suggests – and values in prime London are set to fall.
It added that what it dubbed the 'Golden Age' of booming property prices is unlikely to ever be repeated again and says homeowners should expect average annual increases of 2.5 per cent between now and 2022 - far lower than the 20-year rolling average of 6.9 per cent.
JLL describes the Golden Age for Britain's homeowners as between the 1980s and the 2008 financial crisis, as house prices marched 'ever upwards in both nominal and real terms.'
It adds: 'The market has recovered, but pre-crash growth trends are unlikely to be repeated.
'To understand the outlook, a long perspective is required to identify the historic tailwinds for UK housing and why they may not provide the same momentum in future.'
The data suggests that between 2018 and 2022, prime central London house prices will see the slowest growth of 8.7 per cent.
Additionally, central London developments will see growth of 9.8 per cent and Greater London 11.4 per cent – below the expected UK average of 12.6 per cent.
Forecasts were made taking into consideration factors including expectations for the strength of the economy over the period, the most-likely impact of Brexit on the housing market and predictions for the impact of tax changes and slowing population growth.
The report predicted that 'the UK economic outlook is reasonably steady but below GDP growth for the next two years followed by robust but unspectacular expansion during a three-year transition period'.
Neil Chegwidden, in the residential research team at JLL, said: 'A range of factors are colluding to deliver more moderate UK house price growth over the next five to ten years.
'However, and despite the intrusion of Brexit, we believe this transition will provide a more stable and healthy UK housing market.
'This new housing paradigm should be embraced and welcomed.
'It is good for government, the economy, buyers, sellers and industry participants. But it will also take some getting used to.
'House price growth averaging 2.5 per cent per annum for the next five years will not excite investors or homeowners, but will lay the foundations for a less volatile UK housing market in the medium-term.'
The region predicted to have the biggest property price increases is the North West according to JLL.
Overall, house values are expected to rise one per cent next year, with prime central London witnessing a fall of one per cent and central London developments, Greater London and the South East seeing no growth.
The forecast from JLL comes a day before Savills releases its five-year forecast and ahead of the Bank of England rate rise decision.