2018 was a year of ups and downs for the property market, with the emergence of some strong growth in the Midlands tempered with a stifled market in the capital city. Despite plenty of challenges, a report for lender ‘The Halifax’ points out that 2018 growth has been within its initial forecast for the year and goes on to predict broad stability for house prices in 2019. However, unsurprisingly, it stipulates that this will be dependent on the outcome of Brexit in March.
The report predicts national growth of between 2% and 4% for house prices and goes on to point out that the current shortage of homes for sale will continue to support high prices in 2019, with the result of strong market competition amongst buyers.
“The housing market in 2018 followed a similar trend to recent years. In line with our expectations, house price growth slowed whilst building activity, completed sales and mortgage approvals all remained relatively flat,” said Russell Galley, managing director of the Halifax.
“Looking ahead, aside from the obvious political and economic uncertainty, the biggest issue for the housing market in 2019 will be the degree to which mortgage payment affordability changes. Average pay growth is likely to gather pace but, with a further interest rate increase also predicted, house prices are unlikely to be pushed significantly in either direction,” he pointed out.
As the Halifax report indicates, this year should be a stable year overall for property prices in the face of Brexit. Nevertheless, there will be fluctuations throughout the next 12 months due to this exit from the EU. Property industry experts are forecasting a muted first quarter in particular, due to the build-up to the official withdrawal from the European Union on March 29 as sellers and buyers alike hold fire on their property activities. For sellers, that means hoping for a higher price later in the year and for buyers, hope for more choice.
“Brexit is already a significant influence in the housing market, particularly in London,” offers Ray Boulger, Senior Mortgage Technical Manager at John Charcol. “So, the key questions are how much is already reflected in prices and whether Brexit is better or worse than expected.”
Charcol continues to reflect upon the wider challenges facing the property marking in 2019, emphasising that “Housing is far from a perfect market as changes in demand can happen quite quickly but changes in supply take longer, especially when looking at overall supply, ie. the number of new homes built. The state of the economy, particularly employment, consumer confidence, the availability of mortgages and interest rates will also influence things.”
For the first quarter of the year, at least, Brexit will continue to dominate headlines and assert its influence upon the property market with many vendors and buyers hesitant to enter into transactions before 29th March. Once the break from the European Union takes place, however, and uncertainty subsides to some extent then global factors affecting interest rates will take precedence in the determining of property values.
With that in mind, it would be a mistake to be too insular when considering the 2019 housing market. As far as property prices are concerned, the report from the Halifax encapsulates the overall forecast – muted, yet growth still being reported despite the plethora of economic and political uncertainties which will dominate the year across all aspects of life.