This compares with 5 per cent in 2016 but growth will begin to recover in mid-2018, the property services company has forecast.
While the first half of 2018 is likely to be more difficult, Countrywide has forecast prices will end the year 2 per cent higher.
By 2019 we expect house prices to be growing at an annual rate of 3 per cent.
Fionnuala Earley, Countrywide’s chief economist, said: “Economic conditions for households will remain challenging over the next year as inflation eats into budgets and interest rates begin to rise.
“In addition, fewer landlord purchasers and the later age at which people buy, is affecting the level of demand.
“But we expect the UK economy to recover and wage growth to pick up in response to global growth. That, combined with a continued lack of housing supply, will help to support house prices.
“The housing market is sensitive to confidence which will be affected by the outcome of Brexit negotiations and the implications this will have – particularly on employment.”
Greater London is likely to see price growth slow to 0 per cent in 2017 before rising by 2.5 per cent in 2018 and 4 per cent in 2019.
Meanwhile across the South East and East of England price growth will slow in 2017 to 1.5 per cent and 3.5 per cent respectively.
House price growth will also slow in the North, the Midlands and Wales.
Countrywide is expecting interest rates to begin to rise very slowly, from the spring/summer of 2018 but for wage growth to rise as well, helping household budgets to recover.
Rising interest rates and a more cautious approach from lenders – partly directed by the regulator – will prevent a faster increase in price as wage growth picks up.
Despite little recovery in the levels of housing transactions - due to affordability issues and fewer buy-to-let purchases - the rate of new building is not expected to gather enough pace over the next two years to catch up with previous shortfalls.
A lack of supply will therefore continue to support the level of price growth.
damian.fantato@ft.com
