Annual house price inflation in Britain will fall to zero next year as affordability constraints are compounded by tighter lending conditions, the Nationwide building society forecast today.
If realised, this would be the weakest year for the property market in more than a decade.
"Economic tailwinds are turning into headwinds and house price inflation is expected to drop from the current rate of 9.7 per cent to 0 per cent by this time next year," Nationwide said.
Nationwide said the main reasons for the subdued outlook are a slowing economy, tighter credit conditions, prices beyond the reach of many first-time buyers and lower price expectations. It said interest rate cuts and a lack of supply would provide some support to the market but would not prevent a significant slowdown.
Lower buy-to-let demand is also likely to take the steam out of the market.
Nationwide's forecast is similar to that of the Council of Mortgage Lenders which is predicting house price inflation will slow to 1 percent next year.