Could the year ahead be a subdued one for the property market with growth slowing in the face of political uncertainty and stretched affordability…
While house prices are expected to remain broadly flat across the UK, there will continue to be significant regional divergence. Many commentators are penciling in house price falls in London and the south, while northern regions are likely to see modest gains. Here you can look at how the different regions are likely to fare next year, assuming the UK exits the EU with a deal in place. (? Watch this space!)
The North Property markets in the north of England are expected to be more buoyant than their southern counterparts during 2019. In our area, house prices in the north east have only recently returned to their pre-financial crisis highs and they still have some catching up to do with the rest of the UK. As a result, Hamptons International is expecting property values in the region to rise by 1% in 2019, the highest level of growth it is predicting for any area. Other experts say that while they expect prices to rise by 7% in the coming three years, future growth will be dependent on some areas unlocking their potential through regeneration or infrastructure developments. Price growth in other regions in northern England has been slowing in recent months. This trend looks set to continue into next year, with Yorkshire and Humberside likely to see gains of 0.5%, while prices in the north west are expected to be flat. There remains without doubt, a demand from southern Landlords moving North in the bid for higher yields and this should be enough demand to maintain the plateau. In some northern regions the housing cycle is reasonably strong but there are pockets where local economies are weak, and this is acting as a drag on price rises.
London the slowdown in London began in mid-2016 and this trend is expected to continue into 2019. The property economist at Capital Economics, says: “London has seen a build-up of homes that are struggling to sell and a rise in more determined sellers. He adds that affordability in London is already stretched and the situation will only get worse if interest rates rise. “Overall, we expect house prices in London to fall by 5% during the year,” he says. The head of research, Hamptons International, is slightly less pessimistic, penciling in a fall of 2%, due to Brexit uncertainty hitting confidence and stretched affordability limiting demand. She says: “The wider London market is feeling the effects of stretched affordability. The more affordable outer boroughs that have led the way over the last couple of years are slowing and we expect this to continue as more buyers are pushed further outside the capital.”
Southern regions the slowdown in London has already started to ripple out to southern regions and this trend is expected to continue in 2019. Buoyant house price growth in the east of England means affordability pressures there are now biting. As a result, property values in the region are also expected to fall by 2% during the year. A similar trend is expected in the south east, where prices are likely to dip by 1%. The property market in the south west is also expected to slow down next year, although as affordability is less stretched in the region, Hamptons International is predicting a dip of just 0.5%. The market in the south west is also receives some support from demand for retirement properties and holiday homes and regardless of if prices are up or down by the time Brexit is done and dusted, most homebuyers here are looking for homes rather than investments.”
The Midlands the East Midlands and West Midlands saw some of the strongest house price growth in 2018, while the regions are also less impacted by the dynamics of the London market. Despite recent gains in property values, affordability constraints are still not as tight in the Midlands as in southern regions. The Midlands are also particularly exposed to manufacturing, which could see job losses depending on the Brexit outcome. As a result, most experts and commentators expect prices to dip by 0.5% in the West Midlands and to fall by 1% in the East Midlands. But they also expect the market to bounce back in the second half of the year, once uncertainty over Brexit has cleared.
Wales, Scotland and Northern Ireland These regions were among the top performers in 2018 as house prices remained affordable in relation to local earnings. RICs is expecting to see growth of 1% in Wales in 2019, while prices are expected to rise by 0.5% in Scotland. Indeed, the consensus seems to be that more affordable cities, such as Glasgow, could see increases in property values of 5% next year.