Brexit house prices – what do experts think will happen to the housing market in 2019?

Here's the verdict...

There are three things most Brits are obsessed with. The weather, tea (which as everyone knows, makes everything better), and house prices. If you’re anything like us, you probably use the Zoopla Home Valuation tool at least once a month, know the ceiling price for your street to the nearest penny, and are itching to know what’s going to happen to house prices in 2019.

Related: The cheapest places to buy and rent in the UK – find them with this new price comparison tool

We were, too, so we asked some experts for their take on the housing market. Will Brexit send house prices tumbling, or will we continue to see values rise?

The bank’s view

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Image credit: Colin Poole

‘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,’ says Russell Galley, managing director at Halifax. ‘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.’

On the basis that the UK exits the EU with a form of withdrawal agreement and transition period, however, Russell remains cautiously optimistic. ‘We expect annual house price growth nationally to be in the range of 2 per cent to 4 per cent by the end of 2019. 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 our forecast.’

‘Longer term, the most important issue for the housing market remains addressing the affordability challenge for younger generations through more dynamic housebuilding.’

The mortgage broker’s view

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Image credit: Colin Poole

‘Brexit is already a significant influence in the housing market, particularly in London,’ says 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”.’

‘Also, 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, i.e. 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,’ Ray continues. ‘Many of these are interlinked and so, despite what Mark Carney has threatened, if the economy weakens too much after Brexit I expect Bank Rate to be cut rather than increased.’

‘Longer term interest rates fell sharply in the last quarter of 2018 and these falls are not yet fully reflected in lower fixed-rate mortgages. Other global factors have had a bigger influence on recent interest rate movements than Brexit and this highlights why it would be a mistake to be too insular when considering the 2019 housing market. I expect to many lenders to cut rates on their fixed rate mortgages in January, which will help improve the sentiment of potential buyers as monthly costs fall.’

‘Avoiding a no deal Brexit is clearly in the interests of both the UK and the EU. Therefore Parliament’s approval of what I think is the most likely scenario, an agreement broadly in line with Teresa’s May’s current proposal, with certainty introduced over the maximum timeframe for any backstop, would remove the short term uncertainty and hence be seen as mildly positive. On the other hand, a no deal Brexit would be a short-term negative factor for house prices.

‘Either way, much of the impact on prices is already in the market but activity levels will suffer until the outlook becomes clearer and so the number of housing transactions in 2019 will at best be similar to 2018, but probably a little lower, which means transaction levels will have been broadly unchanged for six years.’

‘Whatever sort of Brexit we get on March 29 will be reflected in the housing market, as elsewhere, but I expect little change in house prices in 2019, with an overall small increase of 1 per cent. As always there will be regional variations, with London showing a small fall and parts of the Midlands and North showing the biggest gains.’

‘Towns in Northern Ireland close to the border with Ireland could present some interesting Brexit opportunities. Although Northern Ireland is seen generally as being the part of the UK most affected by Brexit, traders in border towns like Newry have benefitted hugely from the fall in the pound since the referendum, with some reporting that 75 per cent of their trade comes south of the border visitors. Brexit may present even more opportunities for cross border activity!’

The estate agent’s view

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Image credit: Colin Poole

Commenting on research into house prices in 2018, Richard Donnell, Insight Director at Zoopla, had this to say. ‘While overall values have grown by 1 per cent, this is slower than the 3.5 per cent growth in 2017. The slower growth is down to the value of housing falling in London and the East of England, while values have increased across the rest of the country. Scotland and Wales are where values have grown more than the national average.

‘These changes in value have much to do with the evolving housing cycle and housing affordability,’ Richard adds. ‘Values in London have grown significantly since 2010 but multiple tax changes and affordability pressures are resulting in values falling back.’

More housing news: This is currently how long it takes to sell a property in the UK

‘In contrast, affordability levels remain attractive in many areas outside of southern England. And on the back of rising employment and low mortgage rates we see values outperforming the rest of the country. It’s a trend we expect to continue into 2019.’

So there you have it – things aren’t looking so good if you own in London or the south east. But it’s potentially better news for people wanting to get on the housing ladder in the capital, and for homeowners in other parts of the country. However, until Brexit plays out, it’s hard to be certain of anything.

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