22.01.201822:33:00UTC+00UK to be One of Only 3 Major Markets Where House Prices Unlikely to Grow in 2018 - Fitch

The UK is one of the only major markets not expected to see an increase in house prices this year, according to new forecasts from Fitch Ratings.

The ratings agency's annual housing and mortgage outlook forecasts average prices in the UK to be flat in 2018, with declines in London and the South East due to “Brexit uncertainty, stretched affordability and low income growth”.

The only housing markets assessed by Fitch with a worse outlook for 2018 were Greece, where it expects a two percent drop, and Norway, where prices could fall five percent.

In contrast, Fitch is expecting moderate growth across most of the eurozone, as the European Central Bank's stimulus measures continue to support markets.

In the United States, prices are anticipated to return to their highest levels since 2007 amid a fourth consecutive year of five percent nominal price growth. The ratings agency said property has become “overvalued” in several cities on the west coast, but indicated “a meaningful correction should only be triggered by an unexpected economic shock”.

Fitch also cautioned that many markets are approaching their peak. According to Suzanne Albers, senior director for structured finance at Fitch, “arrears are at very low levels in most markets. They will only move in one direction as mortgage rates rise.”

Canada was noted as a potentially risky area, after prices in some cities like Toronto and Vancouver increased over 50 percent over the last two years.