House prices are a significant metric that concerns consumers across the UK, from established homeowners to those looking to get on the first rung of the property ladder. 2019 is an extremely important year for the housing market in this country.
March 2019 marks the month when Brexit is scheduled to take full effect, with the UK having voted to leave the EU in June 2016. Continued uncertainty over whether the UK will be able to negotiate a positive trade deal before the Brexit deadline has impacted the economy in this country and had a restrictive effect on the housing market.
Before the vote to leave, house prices in the UK had been growing steadily, with some fluctuations, for around half a decade. However, prices fell sharply in June 2016, following the results of the Brexit referendum. In 2017, prices began to creep up and are expected to increase on average by 2.5% by the end of 2018.
But what about 2019 and beyond?
The current uncertainty surrounding the UK, EU and Brexit makes it very difficult to predict the housing market with any great certainty. This said, cautious optimism appears to be the general mind set of forecasters.
In 2019, we should expect a growth of between 2% and 2.5%, similar to the increase seen in the previous 12 months. In 2020, meanwhile, and over the following two years, a growth of 4% is expected. This equates to an average cumulative growth of 18% nationwide by 2022.
However, these rising prices are not expected to be distributed equally across the country.
House price forecasts suggest that the best performing regions will all be within easy reach of London. This includes the popular commuter areas of East Anglia and the South East. House prices in cities such as Southampton, Luton and Brighton are all set to increase by around 40% or more over the next five years. The North West, meanwhile, is set to see an increase on average of some 24%; slightly slower but a rise nonetheless.
Perhaps the most noteworthy impact will occur in the capital itself, where growth is expected to be flat in 2018. Depending on the outcome of Brexit negotiations, this stagnation could continue in London for up to five years. However, the overarching consensus is that this would be neither unexpected nor unwarranted.
Following a number of years of uninterrupted expansion, the housing market in the capital has been growing out of proportion to the rest of the country and, as a result, properties in the area have become overvalued. A relative drop in house prices could, therefore, help to improve affordability, particularly for first time buyers.
The Royal Institution of Chartered Surveyors (RICS) have expect that house sales will fall back by around 5% and probably stay at a standstill for a good while. It further comments that the BOE's claim of a 30% drop in prices following a disorderly Brexit is 'unfounded'. This is mainly because it is is expected that the Bank of England would cut interest rates in the wake of no-deal and look to restart quantitative easing.
Given that the future is far from clear amidst Brexit uncertainty, these predictions paint a relatively rosy picture for house price growth in the UK. Moreover, they indicate that the housing market is resilient and will continue to grow despite a weakening economic backdrop – good news for those looking to invest in a property in the UK.
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