House prices likely to be flat this year, but could fall by five per cent, according to UBS

Helen Cahill
Follow Helen
Edinburgh West End
The outlook for house prices this year is not very positive (Source: Getty)

House prices are expected to stay flat until the end of 2016, and in the worst case scenario could fall by five per cent, analysts have predicted.

The forecast comes from UBS Wealth Management, who have re-set their expectations for house prices due to the EU referendum.

Read more: House prices are being cut by nearly 10 per cent in some parts of London

UBS said London prices would fall faster than prices in other regions; property values in London peaked in August last year, UBS said, and have "significantly deteriorated" since then, reaching their lowest levels since 2008.

Caroline Simmons, deputy head of UBS Wealth Management's UK investment office, said: "The most important factor influencing the outlook for UK housing is how the economy reacts in the aftermath of the shock Brexit result.

"We expect GDP growth to fall in the second half of the year, and only stage a meagre recovery thereafter."

Read more: Mapped - how house prices have changed in each London postcode since the Brexit vote

Although UBS Wealth Management believe "the supply of credit to the UK economy will be unhindered", the deterioration of consumer confidence and uncertainty over what the Brexit vote actually means is "likely to weigh on business investment and hiring".

UBS' verdict on the property market comes after Countrywide said prices would fall by one per cent this year, and that prime central London house prices would fall by six per cent.

In some parts of London, more than a third of properties have had their price cut since April - in Kensington and Chelsea, cuts have averaged nearly 10 per cent.