Royal Institution of Chartered Surveyors (RICS) predicts growth to be about half that in 2016 – but demand will still outstrip supply.
RICS have released their latest survey, which forecasts that prices will rise an average of three per cent in 2017.
Over the next 12 months, RICS said it expected supply issues to continue to drive prices upwards.
The survey said: “Following on from the 2016 forecast, the supply pipeline or lack of it is at the forefront of the analysis and dominates the residential market.
“While there is an improvement, the legacy of building on an insufficient scale has left the average inventory on estate agents’ books close to a historic low.”
A year ago, RICS predicted price rises of 6%. Official figures show October’s annual growth rate at 6.9%, with predictions on track.
Since the EU referendum in June, RICS members have reported a fall in the number of housing coming onto the market, and a rise in demand from would-be buyers registering their interest. Mortgage lenders have backed up these claims, showing a 20% fall in the number of loans to home moves in October.
The RICS Chief Economist, Simon Rubinsohn, said: “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. As a result, the affordability challenge will remain very much to the fore for many.
“Meanwhile, the lack of existing inventory in the market is impacting the ability of households to move and will contribute toward transaction activity over the whole of 2017 being a little lower that in the year just ending.”
RICS said the number of sales was set to fall slightly from 2016’s figure, from about 1.25M to between 1.15M and 1.2M, reflecting a downwards trend over recent months.