UK house prices ‘to rise 3%’ on shortages

British house prices are likely to rise on average by 3% next year as a shortage of new homes coming to the market continues to push up prices, the Royal Institution of Chartered Surveyors (RICS) has said.

Britain’s property market slowed immediately after the vote in June to leave the EU bt since then it has fared better than most analysts expected and there have been signs of a stabilisation in demand for housing.

“Although recent announcements by the government on housing are very welcome, the ongoing shortfall of stock across much of the sales and lettings markets is set to continue to underpin prices and rents,” said RICS chief economist Simon Rubinsohn.

Nationwide Building Society predicted this week house price growth of around 2% against a backdrop of a weaker economy.

Meanwhile, Britain’s public finances showed a slightly bigger-than-expected deficit in November, but looked on track to meet less ambitious deficit reduction goals set by finance minister Philip Hammond.

The UK government’s budget watchdog, the Office for Budget Responsibility, expects growth to slow to 1.4% next year, when prime minister Theresa May wants to start formal EU exit talks. November’s budget shortfall took the deficit in the first eight months of the financial year to €70.8bn.

The OBR said in total it expected the government to borrow €144bn more than planned over the next five years as Britain leaves the EU. Last year’s budget deficit was 4% of GDP — higher than in almost all big advanced economies.