House Price Predictions in 2019

Tue 18 Dec 2018

Where is the property market heading in 2019? 

With Brexit currently dominating the headlines, many will be talking and writing about the ‘impact’ on the property market. And, in areas such as Prime Central London where some property prices have been falling since 2014, Brexit, together with tax increases, has resulted in prices falling further. For example, the average property price in September 2018 for Hammersmith and Fulham is down 4.6% year on year, but down by 7.2% versus August 2015 (Source: Land Registry) 

 Brexit itself does not affect the domestic marketplace but it has dented people’s confidence when it comes to making major financial decisions. So, together with the other economically negative news we’ve had this year, including some job losses and pressures on high street businesses, Brexit gives people a reason to think, ‘I’ll put off that move or purchase and wait for things to settle down’.

But many people don’t have a choice as to whether they move or not. Typically, people move because of a major change in life circumstances, such as:
  • Having a baby
  • Getting married or divorced
  • Being in debt
  • Relocating for work or school catchment areas
  • Or, sadly, losing a loved one
However, times of uncertainty often give rise to opportunities to secure discounted deals which would never be able to find during more settled times, so now could be a good time for investors who have capital now. 

So, if you would like to or need to move in the next year, what do you need to consider? 

Property Market predictions 

If you are thinking of buying, selling, letting or investing in property in the near future, the first thing to be aware of is how different the market has been around different areas of the UK and how it is expected to change further. Some areas have seen increases in prices and rises in rents, some a slight drop since the credit crunch and others have hardly experienced any change. 

So, for your own situation, you have to understand what has happened to your property’s value since you bought it (if you are currently a home owner) and whether the local market is currently active or if many properties haven’t  recently sold. 

The second thing to think about is how long you intend to stay in the property you are looking to move to, this is crucial, as the longer you want to live there, the more likely you are to see fluctuations in prices, so buying a home you love can be more important than short term financial considerations.

Finally, if you know exactly what you want to buy, ask yourself whether that property is likely to still be available in a year’s time? It might not be and if the home you have seen is unique in any way, it can be difficult to find again.




What’s expected to happen to property prices? 

Overall, the news for property prices is good, despite the uncertainty we have experienced so far. On average, property prices have grown in England by just under 3% year on year and are up by 28% (Land Registry data, Aug. ‘18) since the height of the market back in 2007/8. However, this hides huge variations across the different regions; within each region, the variations are equivalent. 













(Source Land Registry)

Overall, Capital Economics believes that house prices will rise at 1% in 2019, partly due to their prediction that interest rates will rise. The exception to this is London which they expect to fall by 2% in 2018 and 5% in 2019. However, any predictions do depend on what happens to the UK economy pre and post Brexit. 

What’s important though, is how a small increase year on year or no change in property prices will affect you as a buyer, investor, renter or seller? 

Click below for breakdown of the pros and cons of being in the property in your region. 

       






Affordable solutions for homeownership

If you are struggling to afford a property in London, it is worth looking at what government support you could secure. That includes offers such as the Help to Buy and Lifetime ISAs, which can boost your deposit by 25%, and free five-year loans on new builds via Help to Buy, as well as Shared Ownership opportunities. 

Shared Ownership is becoming a more popular and accessible route to owning your own home where it allows you to purchase the part of the property you can afford and then rent the remaining amount. This is normally limited to Housing Association properties and new build homes, but Leaders are now able to arrange this on resale properties too and trying to make home ownership an option for as many people as possible.

If you are looking to trade up or down, do check what your property is worth, so you know how much equity you have to put towards your next purchase. It’s likely you will have enough equity to move and, if you are trading down, even to release for extra pension income or to retire early. However, as property prices are expected to fall in the short term, this may reduce the equity you have, but it also may reduce the price you have to pay for the next property. When trading up or down, it’s often better to be more concerned with finding the property that’s right for you, rather than worrying about the market, given that you will probably be staying in the property for the long term.

Property predictions for Investors 

For investors, there may now be some bargains around as the market slows. The downside is prices are expected to continue to fall and you have to balance a bargain purchase with possible continued price falls. In this scenario, it is worth considering leveraging your cash to maximise property returns.  

Proeprty Rental Market in 2019

From a rental perspective, during the budget in 2018, the OBR forecasts suggested wages should grow at a rate higher than inflation over the next few years. As rents are typically tied to wage growth, this is good news for landlords, who could potentially see inflation-beating rental growth as well – something that hasn’t been easy during the credit crunch.

If you are planning on renting, the most important thing is to secure a property as soon as possible and if you are already a tenant, try to remain in the property, because stock is expected to reduce while landlords work out whether to stay in the market or sell due to government tax rises, and this could push rental prices up.