House prices across the UK will rise at a fraction of last year’s frenetic pace, forecasts show. Property prices soared by 10 per cent in 2014 but will grow by just 1.5 per cent over the next 12 months. London will fare the worst, with prices actually dropping by 3.6 per cent over the next year, it is claimed. It follows last year’s record price hike of 17.4 per cent in the capital. Economists said that the housing market had ‘got ahead of itself’ last year and would assume a much more leisurely pace in 2015. Scroll down for video . Forecasts show house prices across the UK will rise at a fraction of last year’s frenetic pace. File photo . Annual price growth across the country will then gradually accelerate again over the next five years, hitting 4 per cent by 2020. This year will be the first since 2009 that the UK as a whole out-performs London, according to the Centre for Economics and Business Research. This is because while prices in the capital stagnate, the housing market is still performing well in the East and South-East, and parts of the Midlands and North of England. But the CEBR said this victory for the provinces would be short-lived, since the London market will also recover in 2016. Prices there are set to rise by 2.7 per cent next year, above the national average of 2.3 per cent. London homes will also suffer no more price falls in the foreseeable future – and are forecast to see annual growth of an estimated 4.7 per cent by 2020. The predictions from economists at the think-tank were upgraded from their forecast in January, when they suggested average prices would fall this year. They said that radical changes to stamp duty had given the market a boost. In recent years many Britons had been deterred from moving home for fear of the punitive tax on house purchases. The tax was charged on the whole value of a property and successive governments had failed to increase thresholds, trapping growing numbers of families above a £125,000 threshold. London will fare the worst, with prices actually dropping by 3.6 per cent over the next year. File photo . But, in December, the Coalition overhauled the system, replacing the unfair ‘slab’ structure with gradually increasing rates, which cut tax bills for the vast majority of movers. Economist Scott Corfe, of the CEBR, said: ‘House price growth in the UK will rise much slower than last year – but it will still be positive. ‘The market got a bit ahead of itself last year, and at the end of 2014 it began slowing down and plateaued. ‘It has now started to pick up again outside London. We are still not building enough houses to keep pace with population growth so, as long as we have a shortage of supply, prices will keep rising. ‘House prices will continue to grow faster than inflation.’ It was a different story in London, however, where he said interest from overseas buyers had dwindled, pushing down prices. While the stamp duty changes meant lower bills for the majority, those buying million-pound homes have been hit by higher rates – deterring international investors and many wealthy Londoners. Mr Corfe said: ‘Stamp duty reform, as well as the depreciation of the euro against the pound – making London more expensive for European buyers – has affected prices in the capital. ‘Uncertainty around the general election and fears of a mansion tax [under Labour’s plans] may have also driven down demand since the start of the year.’
Forecasts show prices will rise at a fraction of last year’s frenetic pace . London will fare worst with prices dropping by 3.6 per cent over next year . This follows last year’s record price hike of 17.4 per cent in the capital . Economists said that the housing market had ‘got ahead of itself’ last year .