As expected, 2018 was a year shaped by Brexit, although its full impact was not really felt until the autumn. In fact, the housing market started 2018 in relatively brisk fashion, with prices rising by 0.6%.
The figures, however, hid some wide variations across the regions. Prices fell in London, where affordability was already reaching its limits, but rose elsewhere.
By May, the market had become more subdued and the gap between the North and South had grown even wider – as prices climbed in the North, in the South, transaction volumes fell and supply levels rose, although there were tentative signs of a recovery in Prime Central London. August showed some of the first signs of the impending Brexit effect, with the market flatter than usual. At the same time, the base rate rose to 0.75%, but as it had been well signposted beforehand; it had little effect on sales.
In September, when parliament returned from the summer recess, we got our first real look at the political chaos Brexit might cause. From then on, consumer confidence began to dip. By December, political infighting had hit new highs and Rightmove’s index showed asking prices had ended the year down 1.7%.
Outside of London (-1.1%) and the Southeast, however, the market fared a little better. Asking prices in the East Midlands (+5.1%), Wales (6.2%), the NorthWest (+3.1%) and Scotland (+1.1%) were all in positive territory. It was also a better year for first time buyers (FTBs).
With stamp duty abolished for joint first time purchases of up to £500,000 and reduced competition from landlords, FTBs made up half of all purchases in 2018 – nearly double the number for 2008 (source: Yorkshire BS). All the other major indices showed property prices grew over the year, but not by much (average. +1.3%).
So, what does 2019 hold in store for the property market? Much, of course, depends on how Brexit plays out. And, between now and March, it is likely to be something of a roller coaster, as sentiment swings with every bit of good or bad news.
There’s little doubt, a no deal Brexit will shake confidence and cause prices to fall, at least in the short term. A deal of any kind is, on the other hand, likely to cause a bounce in the market as pent-up demand is released. There is also the possibility the deadline will be extended beyond March which will only serve to prolong the uncertainty.
Please note – where possible, final figures for 2018 are from the commentator’s own indices.
Nationwide’s indices recorded growth of 0.5% in 2018, which was slightly below their prediction of 1%. They are again predicting prices will rise around 1% to 2%, depending on the final Brexit outcome.
At 1.3%, Halifax’s final figure was towards the middle of their rather wide-ranging expectations of a 0% to 3% rise. This year they have gone for a surprisingly bullish 2% to 4% rise, assuming the UK will get some sort of deal with Brussels.
Hometrack predicted, reasonably accurately, that city wide growth would be between 3% and 5% against an actual figure of 2.6%. Their prediction of a 1% rise in London was wider of the mark, with prices falling by just 0.1%. This year, they have reduced their expectations slightly to +3%.
Rightmove predicted average prices would rise by 1% against a final figure of 0.7%. Their estimate of a 3% rise for first time buyers was somewhat higher than their final figure of 1.3%. At the same time, they believed there would be a 2% drop in London property prices, which was almost double the 1.1% fall. This year they are expecting prices to remain flat.
RICS (Royal Institution of Chartered Surveyors)
RICS accurately predicted prices would slump in London (2018 avge. – 0.85%) and the Southeast but drift higher elsewhere, although their estimate that overall growth would be flat or negligible was a little on the low side (2018 avge. +1.3%). This year they are expecting prices to remain the same.
NAEA (National Association of Estate Agents)
Estate agents are often accused of talking up the market but were surprisingly pessimistic last year, with 43% expecting prices to fall and 44% believing they would remain the same. They were mostly wrong, as prices rose, on average, by 1.3%. This year, 43% of agents expect prices to fall, 39% think supply levels will increase and 35% that demand will drop.
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