Brexit has clouded the trends for the housing market making predictions 2019 problematic.
So what are the market analysts and experts saying?
Property prices likely to remain fairly static in 2019
Property investment specialists JLL are expecting UK house prices to inch up by 0.5 per cent in 2019 subject to a Brexit deal being agreed. Others are similarly cautious although some are anticipating a ‘Brexit bounce’ if negotiations go better than expected. “The Brexit noise can threaten to drown out everything else,” says Grainne Gilmore, Head of Residential Research at Knight Frank. “But outside London, where affordability has been stretched, price growth continues apace.”
Others share this optimism. “If the uncertainty lifts in the months ahead and employment continues to rise, there is scope for activity to pick-up through next year,” explains Robert Gardner, Chief Economist at Nationwide. “The squeeze on household incomes is already moderating and policy-makers have signalled that, if the economy performs as they expect, interest rates are only expected to rise at a modest pace.”
No widespread sense of panic
In November, when a Bank of England report suggested that property prices might plummet by as much as 35 per cent in the event of a no-deal Brexit and spiralling interest rates, the response from industry professionals was pretty robust. “We believe this is highly unlikely,” said Lucian Cook, Director of Residential Research at Savills. “A correction of this nature is without precedent and the economic conditions required are at the margin of a wide range of potential outcomes.”
The regions are expected to out-perform London
Prime central London (PCL) continues to be out-performed by the regions with high stamp duty rates on multi-million pound properties still on the radar. Many investors are awaiting the outcome of the Brexit process before making their move. “Substantial economic and political uncertainty remains and we expect to see stagnant prices or further negative growth in PCL in the final weeks of 2018,” says Stephanie McMahon, Head of Research at Strutt & Parker. For 2019, Strutt & Parker predicts UK-wide growth of 2.5 per cent and two per cent growth in London as a best-case scenario, with a five per cent drop as the downside risk.
Industry analysts and economists surveyed by Reuters have predicted that house prices in the capital will fall by 0.3 per cent in 2019 after a fall of 1.7 per cent in 2018. Things are looking rosier in the North West, where Savills expects price growth of 21.6 per cent over the next five years. Knight Frank’s forecasts for 2019 anticipate that the strongest growth will come in the North East and Yorkshire.
Cautious optimism about UK house prices in the medium term
If the short-term outlook has become murky with Brexit, experts are confident of modest but sustained growth in the medium term. “Our assumption is that gradually rising interest rates will support property price growth of 14.8 per cent at national level over the next five years,” adds Lucian Cook of Savills. Strutt & Parker expects house prices to rise by 18 per cent between 2018 and 2022. “The fundamentals of the UK economy remain broadly positive with sentiment remaining cautious,” explains McMahon.