UK house prices are set to rise by three per cent next year and central London prices will stop falling as they have done throughout this year, according to chartered surveyors.

The Royal Institution of Chartered Surveyors (Rics) has predicted that house prices will continue to rise on the back of a shortage of housing supply, and that rents will also climb by between two and three per cent.

In central London, house prices have been falling this year, with values down by as much as 13 per cent in Chelsea. However, Rics said the market will be propped up in 2017 by interest from foreign buyers following the dramatic fall in the value of the pound after the Brexit vote.

The most growth in London house prices next year has been tipped for outer boroughs such as Barnet, which are still relatively affordable, and at key locations along the high speed Elizabeth line.

Simon Rubinsohn, Rics chief economist, said: "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 than in the year just ending."

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