Residential property prices in the UK is likely to be stable in 2019, but depends on Brexit deal
The housing market in the UK has performed in line with expectations over the past year with prices set to be stable in 2019, according to an end of year analysis for lender the Halifax.
The report points out that 2018 growth has been at the lower end of its forecast of 0% to 3% growth for the year.
It predicts broad stability for house prices in 2019 with growth of between 2% and 4% price inflation, although it warns that this will be dependent on the outcome of Brexit which takes place at the end of March.
It also points out that the current shortage of homes for sale and low levels of house building will continue to support high prices in 2019 and this will constrain demand
Managing director of the Halifax, Russell Galley said the housing market in 2018 followed a similar trend to recent years. In line with their expectations, house price growth slowed whilst building activity, completed sales and mortgage approvals all remained relatively flat.
Galley said this was driven by a combination of continued uncertainty regarding the future growth prospects of the UK economy, and the ongoing challenge faced by prospective buyers in building up the necessary deposits.
He said that 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.
Galley said that despite current political upheaval, and on the basis that it is still most likely that the UK exits the European Union with a form of withdrawal agreement and transition period, the lender expects annual house price growth nationally to be in the range of 2% to 4% by the end of 2019.
He said this is slightly stronger than 2018, but still fairly subdued by modern comparison. However, the uncertainty around how Brexit plays out means there are risks to both sides of their forecast. Longer term, the most important issue for the housing market remains addressing the affordability challenge for younger generations through more dynamic house building.
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