If there is one event that has dominated the political and economic landscape in the UK in past months, it is the ever-present spectre of Brexit. Looming large both behind and before us, it has cast the long shadow of uncertainty across our country – a mood that has spread beyond the politically astute to the ordinary house buyer. It is little wonder that those buying or selling property are concerned. Sure to have far-reaching implications for the country as a whole, our exit from the European Union will inarguably affect housing prices and market growth, leaving many questioning what its exact impact will be.
Although we do not have a crystal ball to help answer that question, we’ve taken a look at the most up-to-date and informed resources around to bring you some of the property market predictions currently being made by the experts. They undoubtedly make for some very interesting reading…
So What Are Our Property Market Predictions?
Prediction 1: House prices to remain flat for the next year
Our first prediction comes from a host of experienced surveyors and was originally reported in The Guardian. It was made on the basis of the property market having almost grounded to a halt, with activity in many areas akin to the levels seen in 2011. The basis of it is that enduring political uncertainty combined with low stock numbers and tax changes is likely to catalyse flat prices and rents for at least the next year, taking us well into 2018. The evidence for this is supported by a large number of surveyors across both London and south-east England, who have noted continually falling prices.
A spokesman for The Royal Institution of Chartered Surveyors (RICS) reported: “Record low stock numbers, political uncertainty, and the aftermath of tax changes are obstacles hindering the UK housing market, with price growth and sales activity subdued.” A poll of valuers completed around this time indicated the softest reading since early 2013, with south-east England in particular showing its weakest regional reading since 2011. According to Your Move spokesman Phillip Hiatt, this is likely to mean that vendors of older stock will be forced to reduce prices if they wish to achieve a successful sale.
Unfortunately, this could well be an enduring trend. Giving their forecast on the future of house prices, RICS stated: “Near-term price expectations continue to signal a flat trend over the coming three months at the headline level. Over the next 23 months, respondents remain more optimistic, with a net balance of 28 percent anticipating an increase in prices, albeit this was the least positive reading since last July, at the time of the EU referendum results.” Rent increases are also expected to remain low, with likely growth of no more than two percent nationally over the course of the year.
Prediction 2: House prices to fall to lows of £70,000
In addition to reports that house prices are likely to remain flat, there have also been more startling warnings: that a full-scale crash may well be imminent, one that could see values plummet to as little as £70,000 in places like Northern Ireland. According to the experts, such an event could shave around £82,592 off property values in London, and would take seven years and seven months for the country to recover from.
Such property market predictions have been catalysed by the continuing instability of the British market, which has seen the tide begin to turn with regards to growth, with a levelling off now apparent after many years of healthy increases in value. Such an event would be likely to hit London the hardest, as this is where the current price plateau has proven most dramatic. Commenting on this, expert Martin Ellis says: “House prices have flattened [and] the annual rate of growth has fallen [to] the lowest rate since May 2013. Although employment levels continue to rise, household finances face increasing pressure as consumer prices grow faster than wages.”
According to projections, the biggest drop in value would be seen in the South East. Despite the average house price currently standing at £315,807, this would likely drop to around £253,327 in the event of a crash – a devaluation of a phenomenal £62,480.
Prediction 3: House prices forecast to rise by 2019
The current property market predictions are not all negative. There is cause for greater optimism when we look further ahead, with house prices forecast to have risen again by 2019. According to the experts, this is due to a lack of supply. Although Brexit will continue to pose a risk, its fallout should eventually be negated by a shortage of stock. Especially with the number of houses available lower than the number of buyers looking to purchase.
The figures are reassuring, with prices expected to increase two percent by the end of 2018, and three percent by the close of 2019. The downside to this is that it means it will take three years for property owners to see the same level of growth experienced in 2016 alone. As economist Fionnuala Earley explains: “Economic conditions for households will remain challenging over the next year as inflation eats into budgets and interest rates begin to rise, but we expect the UK economy to recover and wage growth to pick up in response to global growth.”
The greatest risk to these positive property market predictions is Brexit, which will continue to impact confidence in the housing market. This means that the outcome of negotiations will remain important in influencing future increases. As it stands, however, the latest house price reports from Rightmove do support these predictions, indicating growth of 1.6% in London when compared to the same period last year, and an average growth in asking prices of 3.1% for England and Wales as a whole.
It is true that hard times undoubtedly lay ahead for the housing market. Yet this is nothing that it cannot recover from. Although its future currently teeters on the brink, there is every reason to hope that such a situation will not endure for too much longer.