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 17.4 per cent over next year . This follows last year ’ s record price hike of 3.6 per cent in the capital . Economists said that the housing market had ‘ got ahead of itself ’ last year .