The UK housing market had been fairly easy to predict throughout 2018. In broad terms, price expectations have remained stable in the face of widespread market inertia, albeit with London and the South East doing less well than other parts of the country.
So will house prices fare much the same in 2019? Or are there other economic factors likely to cause a shift?
Brexit and the housing market
When looking at the factors which might impact house prices during 2019, it’s hard to look much further than the impending break with Brussels. For many homeowners, and would-be homeowners too, it’s this issue which is exercising minds and dominating decisions about whether to enter the market or delay longer.
While this mood may only intensify in the run up to 29 March (‘euro-divorce’ day), there will still be a volume of property owners who need to put a house on the market. But even though the four D’s – death, disaster, debt and divorce – may force the hand of many sellers, there will be a far smaller number of people whose circumstances demand an early purchase which won’t wait.
With the Brexit deadline looming faster and faster, and a second referendum appearing to be out of the picture, the pressure to decide whether or not to buy a home before Brexit is increasing. The future is unknown for every single person and with the government not deciding on a deal yet – or even a no-deal – people are even more uncertain about buying a house. The question is should you buy a new house before or after Brexit? Read more
An overly simplistic assessment?
Some observers feel that the split with Europe has been somewhat overplayed as an explanation for the subdued housing market of recent times. According to this view, we are in fact experiencing a ‘push-back’ response, a reality check to counterbalance the longer period during which house prices have continued to rise at a rapid rate – most of all, of course, in London and the South East region. Rising prices have been fuelled by contributory factors such as historically low mortgage rates, an acute shortage of housing stock, consistently high rates of employment and a crop of Help to Buy schemes. And many experts expect these features to continue to exert some influence on the market during 2019, almost regardless of what the final outcome of Brexit negotiations may be.
The effect of a market correction or reset is likely to be most apparent in those UK areas which have enjoyed the highest levels of house price growth in recent years. In the past this might have simply meant London prices increasing at an appreciably slower rate. But with the British exit from the EU affecting confidence in London far more than anywhere else in the UK, during 2019 we could see modest price falls in London itself and perhaps a flat market throughout the capital’s commuter belt.
Expect buyer discounting to come into play
If the market is to attract buyers in these challenging economic times, it is reasonable to assume that some form of discounting will be needed. Many believe that prices would need to be reduced by around 10% to 15% to induce would-be house purchasers to push forward with their plans. And if streetwise sellers look at this strategically, they will realise there is every chance they will be able to barter a similar deal of their own when bidding for their next property.
Needless to say, there will still tend to be micro-markets – areas which buck the overarching trend. Those areas and properties which are the most desirable will remain so, and thus sell more readily and at a price less affected by prevailing market sentiments. For instance, many expect country properties with adjoining land to become more popular in 2019. And likewise, cottages in prime tourist locations are likely to be seen as potential investments thanks to the increasing number of Brits ‘staycationing’.
Another noticeable trend set to continue in 2019 is the readiness of house-seekers and owners to undertake upgrades and improvements which make their homes more efficient and eco-friendly. And conversely, this growing focus on sustainable housing which offers low maintenance and affordable running costs will thus have an adverse effect on the prospects of selling any kind of home which is demonstrably inefficient by modern standards.