Marketing No Comments

Nationwide Buy To Let Review Of The Year

The private rental sector nationwide has remained robust through 2018, despite dour predictions as last year drew to a close. The theme of 2018 has been regulatory impact, ranging from the imminent implementation of the Tenant Fees Bill to the persistent teething problems with the notorious Right to Rent.

Criminal landlords have found it increasingly hard to operate; a London landlord checker and a £2 million rogue landlord fund have vowed to clean up the sector. While Brexit has been a looming spectre over the year, ‘uncertainty’ remains the key descriptor and its likely that ascertaining its true impact will be a job for next year’s review.

A quieter housing market was seen throughout the year. House price rises have slowed, according to Nationwide, dropping to their slowest pace since May 2013 in October. Economic uncertainty, stemming largely from Brexit but also a nationwide tightening of the purse strings, encouraged a slump in house prices.

The Tenant Fees Bill has been a cause of controversy nationwide throughout the year.

June 5th saw the first sitting of the bill. It was at this point that the issue of the deposit requirement was first raised. MP Sarah Jones argued that currently, the majority of landlords require a 4-week deposit. However, should a 6-week cap be imposed, it is likely that the majority of landlords would raise their deposits to match this figure.

In contrast, the National Landlords Association (NLA) argued that a limit of just one month limits flexibility in tenancy requirements. They took the unlikely angle of defending the nation’s pets – suggesting that properties who permit furry friends should be entitled to demand a larger deposit to cover potential damage.

The bill was generally met with discern by landlord bodies, with ARLA Propertymark citing its own research as saying tenants nationwide will end up worse off with a fee ban due to raised rents, rather than seeing a more affordable private rented sector. The RLA complained that by taking months to become law, the bill is inefficient and suggested that far quicker changes could have been made.

In spite of criticism, the bill pressed on and towards the end of November, the second reading for the tenant fees bill saw it pass through the House of Lords without amendment. The third and final reading will come after the report stage, although the deposit cap remains a contentious issue.

While the Tenant Fees Bill has been a steady presence throughout the year, it has been all but overshadowed by the constant controversy surrounding Right to Rent, an issue amplified by the Windrush Scandal which saw a number of British subjects who originated from Caribbean countries as part of the ‘Windrush Generation’ wrongly deported and denied citizenship rights such as medical care. The issue arose as a direct result of Theresa May’s ‘Hostile Environment’ policy, the same policy which saw the implementation of Right to Rent.

Right to Rent requires that landlords determine whether their tenants have the right to remain in the UK, facing criminal charges if they fail to do so. As a result, research from the Joint Council for the Welfare of Immigrants (JCWI) found that 51 per cent of landlords are now less likely to let to foreign nationals. 2018 saw over 400 fines issued to landlords, amounting to £265,000 by the end of March, although this figure included fines from the previous year.

The policy has seen two separate legal challenges launched against it in 2018, following claims that the legislation forces landlords to ‘act as border guards’.

The first case was launched by the JCWI. Legal policy director at JCWI, Chai Patel, said: ‘The right to rent policy is designed to encourage irregular migrants to leave the country by making them homeless. The problem with it, apart from the inhumanity of that proposition, is that there’s no evidence it works. The Home Office hasn’t shown that the scheme will do anything to increase voluntary departures, which have actually reduced since the scheme came into force. Worse, the scheme causes discrimination against foreign nationals even if they have immigration status.’

He continued: ‘It also causes discrimination against British citizens who don’t have passports. Faced with our evidence, the Home Office has buried its head in the sand and refuses to review the scheme before forcing it onto Scotland, Wales and Northern Ireland. We have no choice now but to challenge this pernicious and ineffective policy through the courts.’

This was met with support from landlords, who have condemned the policy. The RLA supported a judicial review of Right to Rent, arguing that landlords nationwide should not shoulder these responsibilities.

A second challenge comes from a woman who faced eviction after her landlord was told she did not have permission to reside in the UK after the Home Office lost her passport when she applied to extend her visa. The woman’s lawyers are in the process of arguing that the ‘right to rent’ policy is not compatible with the Human Rights Act.

Finally, independent chief inspector of Borders and Immigration David Bolt has condemned the scheme, writing in a foreword to his report that the policy has ‘yet to demonstrate its worth as a tool to encourage immigration compliance’.

However, while it appears universally accepted that the policy has brought little good to the sector, it served its creator James Brokenshire well when he was promoted to Secretary of State for Housing following Amber Rudd’s resignation during the Windrush Scandal and Sajid Javid’s promotion to Home Secretary.

While the Tenant Fees Bill and Right to Rent might have dominated the headlines during 2018, there has been plenty of lower profile legislation adding to the regulatory landscape for landlords.

Councils have been granted new powers to crackdown on rogue landlords while a new fund has been launched to combat bad practice in the sector. The second part of this review in the New Year will focus on those regulations that were introduced to protect tenant rights, as well as investigating predictions for the coming year.

Source: Residential Landlord

Marketing No Comments

UK real estate outlook 2019: Brexit to test the market

With the UK’s deadline to leave the EU just over three months away, all eyes on the UK real estate market and how it will behave when – or if – Brexit becomes a reality next year.

There is a general consensus that returns and capital values will weaken in 2019, but the degree to which is unknown. The uncertainty has pushed some investors into two distinct camps: those avoiding the market full stop, and others are preparing for opportunities that arise from the anticipated disruption.

The latest consensus forecast published by the Investment Property Forum (IPF) shows most investors expect, on average, returns to slow and capital values to move into negative territory.

According to IPF, the commercial real estate outlook for 2019 is weaker for most markets, with the exception of the industrial sector.

Total returns are expected to drop from 6.2% this year to 3% in 2019, while capital values will fall across all sectors – except for industrial where they will rise by 2.7%.

Capital Economics agrees and says a gradual upward movement in yields over the coming years is expected to result in returns slowing further.

“Despite this, neither us, nor the IPF Consensus, expect the commercial property sector to experience a hard landing,” the economic research consultancy says.

“Despite the risk of a no-deal Brexit, the central view of both us and the IPF Consensus is that the commercial property sector will experience a soft landing.”

In fact, even under a no-deal Brexit, Capital Economics expects values to only fall by between 5% and 9% over two years.

This is substantially more optimistic than the Bank of England, which recently warned that capital values on commercial property could fall by 27% over five years under a “disruptive” Brexit and by 48% under a “disorderly” departure.

Capital Economics notes that the central bank’s analysis was “based on worst-case assumptions designed to stress test the banking system”, rather than providing “plausible forecasts”.

No-go area or land of opportunity?

William Hardyment, a fund manager at Floreat Real Estate, says: “Brexit is creating uncertainty. Due to this, cyclical timing and structural changes in the market, we anticipate UK real estate to be stagnant in the first quarter of 2019.”

That aside, Hardyment says the London-headquartered investment firm sees value in the office sector, which is supported by the strong fundamentals of restricted supply and sustainable strong tenant demand.

“Brexit is causing an overselling of risk on good quality property where intensive asset management will be required, Hardyment says.

“Assets, supported by infrastructure and attractive amenities, that can adapt to evolving tenant requirements will deliver attractive returns, protect against cyclical slowdown and weather Brexit risks – in whichever form it may take.”

In the past couple of years following the vote, London has continued to see some major real estate investments. Office construction in the UK capital during the six months ended 30 September fell as completions hit a 14-year high, according to Deloitte Real Estate.

The Deloitte survey revealed that office space currently under construction in central London stood at 11.8m square feet, representing a 13% decline from six months ago but still above the long-term average of 10.5m square feet.

According to data compiled by CBRE, London continued to be a preferred channel for Asian investors this year, accounting for 26% of the region’s total outflows.

Singapore company City Developments Limited recently splashed out £385m for the 125 Old Broad Street after paying £183m for another London office, Aldgate House, the month before.

The group’s CIO Frank Khoo said at the time that City Developments had “confidence in the long-term fundamentals of London as a global financial hub with a robust office market”.

The confidence in the long-term fundamentals of London is also seen by some of the UK’s biggest landlords. M&G Real Estate continues to invest; it recently paid £115m for the Financial Times’s London headquarters. It also advised an Asian investor in the acquisition of a 50% stake in the Highcross shopping centre from UK REIT Hammerson for £236m.

Paul Crosbie, who manages M&G value-add real estate funds in the UK, thinks Brexit uncertainty is leading to “fundamentals being overlooked and [the] perceived risk overstated at times”.

He says: “This creates a unique opportunity to buy well located, good-quality assets that need attention – perhaps they have a gap in income, or require some capital expenditure.

By “enhancing the income profile of these assets”, Crosbie says M&G can “create value through clever asset management, effectively repositioning them to a grade-A, core-quality standard”.

Crosbie explains that after the referendum result in 2016, there was a short, sharp drop in pricing in capital markets. Core assets quickly recovered; non-core did not and this divergence has continued throughout the Brexit process.

According to Crosbie, fundamentals remain strong with robust levels of tenant demand, yet restricted supply of quality new space.

The M&G UK Enhanced Value Fund (UKEV), was launched early in 2018 to target mispriced assets and take advantage of the risk aversion created by the political uncertainty.

“Since launching the fund in the first quarter, we have assembled a diverse portfolio of well-located, income-producing assets with a geographic focus on London and the south, Crosbie says.

“These assets are well placed to ride through any further Brexit storm. Moreover, the fund is designed to take advantage of any further dislocation in pricing with a three-year investment window if a disorderly Brexit ensues.”

The latest European Regional Economic Growth Index (E-REGI), published by LaSalle Investment Management shows that London remains the leading city for real estate occupier demand in Europe.

The E-REGI index – made up of nearly 300 regions in 32 European countries – puts London top for a second successive year, narrowly beating Paris.

LaSalle, however, says the index “offered evidence that London’s resilience in the run-up to the UK’s exit from the European Union was not mirrored by the rest of the UK”.

Gramercy Europe which invests across Europe excluded the UK market for its most recent fund and CEO Alistair Calvert says the company might do the same for its next fund.

Calvert, who led a management buyout of Gramercy Europe from Blackstone in October, says this was to avoid discussions with prospective investors becoming bogged down with debates about Brexit.

That said, Calvert believes opportunities in UK logistics could arise as a result of a “disorderly Brexit” that creates “inefficiencies” and “friction” in trade and the transport of goods.

This and the stockpiling of goods could increase the demand for logistics facilities, he says.

Ludo Mackenzie, the head of commercial property at Octopus Property, says: “While we continue to see wider market volatility as a result of the ongoing Brexit process, it remains our view that any repercussions cannot be generalised, and there will inevitably be some winners and some losers within the real estate sector.”

Mackenzie says Octopus, a specialist UK property lender, is seeing increased appetite from institutions, from pension funds and asset managers through to mainstream banks, looking to move away from direct lending but remain exposed to the favourable returns the sector has on offer via credit lines to specialist lenders.

“Some sectors, industries and geographies will undoubtedly be adversely impacted by Brexit, while others will potentially benefit,” he says. “We continue to see a shift in borrower appetite away from the high-street banks in favour of non-bank lenders, something that we don’t expect to change course in the foreseeable future.”

Source: Real Assets

Marketing No Comments

UK economy grows but business investment falls for third consecutive quarter

The UK economy grew at its fastest rate in almost two years in the three months to September but business investment fell for the third consecutive quarter.

GDP grew by 0.6 per cent in the third quarter, the Office for National Statistics said today, confirming its initial estimate last month.

But the longer term picture remain “subdued” it said, with business investment dropping 1.1 per cent to £46.9bn.

It is the first time investment has dropped over three consecutive quarters since the economic downturn of 2008 to 2009.

The UK’s current account deficit widened by £6.6bn to £25bn (4.6 per cent of GDP) in the three months to the end of September – the largest deficit since the third quarter of 2016.

The widening was down to increased profits from British companies flowing to foreign investors.

EY Item Club economist Howard Archer said: “The further, marked rise in the current account deficit is disappointing as an elevated shortfall is a potential source of vulnerability for the UK economy – particularly if there was any major loss of investor confidence in the UK for any reason such as Brexit concerns.”

ONS figures also showed that borrowing in November was £7.2bn, the lowest November borrowing for 14 years and £900m less than the same month last year.

GDP growth was led by the services sector, while construction and manufacturing also contributed to the growth.

Household spending also increased 0.5 per cent, the eighth consecutive quarters in which households have spent more than they received.

Head of national accounts at the ONS Rob Kent-Smith said: “Today’s figures confirm the economy picked up in the third quarter with a solid showing from services and construction.

“However, the longer-term picture remains subdued and business investment has now fallen for three consecutive quarters.

“Households continued to spend more than they received, for an unprecedented eight quarters in a row.”

Source: City AM

Marketing No Comments

London ends the year with negative growth for the second time in 23 years

House prices in the capital have fallen by 0.1% over the past 12 months, making it only the second time in 23 years that London has ended the year in negative growth, The Hometrack UK Cities House Price Index has found.

Recent house price falls are doing little to materially change the affordability picture in London. The house price to earnings ratio peaked at 14x in 2016 and has started to fall but remains stretched at 13.3x.

Richard Donnell, insight director, Hometrack said: “The diversity of London’s housing markets is shown by the clear divide between low house price growth in outer London and commuter areas and nominal price falls concentrated in high value, inner areas of the capital. In 2019, house prices we expect prices to continue to fall most in central areas of London.

“Our projection for a 2% fall in overall London prices will reduce the price to earnings ratio to 12.8x, in line with levels last recorded in mid-2015.”

Prices are falling across two thirds of local authority areas across London City by up to -3.5% in Camden, while average values are rising in a third of markets by up to 2% in Barking and Dagenham.

House price inflation has slowed to 2.6%, the slowest rate of annual growth since 2012, due to ongoing price falls in London and a sustained slowdown across cities in Southern England.

Edinburgh is currently the fastest growing city (6.6%) with price rises in Manchester and Birmingham also running at above 6%. However, only four cities are registering higher levels of house price growth than this time a year ago – Manchester, Liverpool, Cardiff and Newcastle.

The cities that have the seen the greatest slowdown are all located in the South of England; Bournemouth, Portsmouth and Bristol.

Affordability pressures have increased in these cities over the past year and they now record the highest house price to earnings ratios outside of London, Oxford and Cambridge.

Over the course of 2019 Hometrack expects UK city house prices to rise by 2%, as above average growth in large regional cities offsets price falls in London.

Prices in London are forecast to register house price falls of up to 2%, while in more affordable cities such as Liverpool and Glasgow price could rise by another 5% next year.

Donnell added: “Outside of London and the South affordability levels in regional cities remain attractive but this is changing.

“House price growth has run well ahead of earnings growth for the last five years and together with small increases in mortgage rates, as well as growing economic uncertainty, the speed at which households bid up the cost of housing is reducing.

“The fundamentals of housing affordability will shape the prospects for city house prices in 2019. This is already the case with flat to falling prices in the most unaffordable cities and above average growth in the more affordable areas.

“Ultimately, the speed at which affordability translates into price changes depends on economic factors, changes to mortgage rates and household sentiment. Brexit is the greatest driver of uncertainty in the near term and the prospects are for a slow start for the housing market in 2019.”

Source: Mortgage Introducer

Marketing No Comments

Best Investment Property For Rental Yields

Buy to let investors are always looking for the best rental yields, so what type of properties can provide the best rental yields at the moment?

According to data from online buy to let agency yieldit, three out of the top five highest-yielding properties were houses with three bedrooms or more, producing net rental yields of up to 11 per cent.

Houses with three bedrooms or more are able to attract multiple tenants or larger families, and also tend to be freehold and therefore have no service charges attached that need to be deducted from the net rental yield.

In fact, houses as a whole came top for rental yields at an average of 6.4 per cent, followed by studios at 5.3 per cent and apartments at 4.9 per cent.

When it came to apartments, one-bedroom apartments were found to be a better investment than two-bedroom, with average net rental yields of 5.4 per cent compared to just 4 per cent.

One-bedroom apartments without parking were found to have higher rental yields (5.5 per cent) than those with parking (5.2 per cent), likely down to a lower purchase price.

Head of Sales at yieldit, Ryan Hughes, commented: ‘Deciding on what type of property to invest in is one of the biggest choices a landlord has to make. Houses suitable for families remain a popular choice, and yields can be significantly higher when you remove costs like ground rent, service charge and self-manage – however it’s important to note that this type of property might require more work and unexpected maintenance costs could affect annual returns.’

He continued: ‘For those looking to invest in apartments, the data suggests that there is a growing demand for one-bedroom apartments without parking. As environmental issues become more prevalent, we can expect to see tenants opt for more environmentally friendly ways to travel and an unwanted parking space might push up the price for renters.’

Source: Residential Landlord

Marketing No Comments

Scotland’s housing market ‘bucking the trend’ as average cost of a home hits new high

Scotland’s housing market is in a good position to face any challenges that lie ahead, experts said as the average cost of a home hit a new high.

The latest House Price Index by Your Move/Acadata found the average price in Scotland stood at a new peak of £184,569 in October.

Annual price growth that month rose to 5.5% when compared with the same point in 2017, the highest rate since April.

The growth rate was five times the average price growth of 1.1% seen in England and Wales in October.

Alan Penman, of chartered surveyors Walker Fraser Steele, said: “Despite any uncertainty surrounding Brexit, the Scottish market could hardly hope for a better position from which to face whatever challenges the next few months bring.”

The index attributed the rise to a general gradual increase over the last three years, and “a turnaround that has seen a return to monthly increases after falling prices during the summer”.

Edinburgh and Glasgow were described as contributing significantly to the overall figures in Scotland.

In the capital, prices were up around 10% on the same time a year ago to £285,077, while Glasgow witnessed a yearly jump of around 9% to £164,689.
Overall, 26 of Scotland’s 32 local authorities saw prices rise over the year, with East Dunbartonshire, Argyll and Bute, Angus, Clackmannanshire and the Western Isles among those said to be showing “real strength”.

The report stated: “Despite a context of relatively few transactions, five local authority areas in Scotland still saw annual house price growth of over 10% in October.

“For comparison, only one local authority area in England saw price growth of over 10% in the same month.

“Despite the growth, the market is not entirely immune to Brexit uncertainty. While much of the increase in prices is supported by low mortgage rates, good wage growth and high employment, it is also due to short supply.

“Buyer demand is strong, but uncertainty means sellers are in no hurry to put their properties on the market.”

Christine Campbell, Your Move managing director in Scotland, said: “Setting a new peak average price at a time when many parts of the UK are struggling to maintain prices is a significant show of strength from the Scottish market. Scotland continues to defy the pessimists.”

Source: Herald Scotland

Marketing No Comments

Boost to Scotland’s commercial property market as year comes to an end

MORE than £2.5 billion is expected to have been invested in Scotland’s commercial market by the end of the year, according to one global property company.

Some £2.485bn worth of deals have already been completed, and Savills says this will round up by Hogmanay.

The figures mark a 10% increase on those from last year.

Nick Penny, head of Scotland at Savills and director in the investment team, said: “Regardless of Brexit, the simple economic argument around supply and demand of good quality offices is very compelling for Scotland.

“Our development pipeline and general market confidence was paused for longer than the rest of the UK following the financial crash due to uncertainty around the independence referendum. The result is a critically low level of Grade A office supply in Edinburgh and Glasgowthat makes a strong case for rental growth and new development.

“Highlighting this point is the reality that Edinburgh’s development pipeline is now almost entirely pre-let.

“Low yields in Edinburgh reflect the potential for growth and lack of risk however despite the strong level of investor demand for the Scottish capital, a lack of assets being marketed for sale in 2018 as a result of preceding record levels of activity has hampered overall transaction volumes.”

In 2018, Glasgow saw nearly twice the office transactions than Edinburgh did, and Aberdeen also saw a rise in activity with close to £170 million changing hands.

Penny added this greater spread of investment activity across Scottish cities, rather than specifically in Edinburgh, was notable.

“By investing in Edinburgh, and Glasgow, you are investing in a landlords’ market as supply is so limited and with its World Heritage status there will be restricted opportunity to change this dynamic in Edinburgh.

“Meanwhile, in Aberdeen a gradual improving economy and uptick in office activity being led by the oil and gas sector is piquing the interest of those investors looking for value.”

Savills says prime office yields in Edinburgh are at 4.5%, Glasgow 5.25% and 6.25% in Aberdeen.

Source: The National

Marketing No Comments

London house prices slump as Brexit stagnation spreads to suburbs

London house prices fell in October as slowdown in the capital dragged down UK property price growth to its lowest level in five years.

House prices in London fell 0.3 per cent in October, taking the annual price fall in the capital to 1.7 per cent, according to data released today by the Office for National Statistics (ONS).

The sluggish figures dragged the average price rise across the UK to 2.7 per cent, the lowest annual rate since July 2013.

Uncertainty in the run-up to Brexit has led to a stagnation in the capital’s property market, with house prices falling each month since July this year. The latest fall takes the average London property value to £473,609.

The ONS said falling house prices have mainly been driven by inner London boroughs, where annual growth has been negative since the beginning of the year.

But prices in outer London fell by 0.2 per cent in October, the first annual fall since 2011, suggesting the slump has now spread into the suburbs.

Chris Sykes, mortgage analyst at Private Finance, said: “While the rest of the UK may be enjoying positive growth for now, it’s important to remember the wider UK property market often takes its lead from London.

“With Brexit uncertainty likely to continue well beyond 29 March, UK house prices could be set to weaken nationwide in 2019.”

ONS figures also revealed UK inflation fell to a 20 month low in November, rising just 2.3 per cent. It said the slowdown was fuelled by a drop in petrol prices ahead of Christmas.

Jonathan Samuels, chief executive of Octane Capital, said: “The million dollar question at present is whether the property market slowdown turns into a property market meltdown.

“With Brexit day approaching, the hope is that strong employment levels, falling inflation, a lack of supply and continued low borrowing rates will prevent a collapse in prices.”

Source: City AM

Marketing No Comments

Letting agents warn tenants that period of slow rental growth is ending as supply falters

Letting agents and broker groups are warning tenants not to be fooled by current slow rental growth.

ARLA Propertymark has warned that rental property supply has hit a seven-month low as agents warn of more landlord exits and subsequent rent hikes.

Its Private Rented Sector (PRS) report found the supply of properties available to rent fell to 183 in November from 198 in October.

This is down 4% annually.

The warnings come despite the number of tenants experiencing rent increases falling for the third month running in November, with 21% of agents reporting that landlords increased rents, compared with 24% in October and 31% in September.

However, year-on-year the number of tenants experiencing rent rises is up from 16% in November 2017.

Agents also reported that demand from prospective tenants decreased in November, with the number of applicants registered per branch dropping to 55 on average, compared with 71 in October.

David Cox, chief executive of ARLA Propertymark, said: “It looks like tenants are starting to take control, with the number of landlords hiking rents falling for the third month in a row.

“However, as we look ahead to 2019, things don’t look as positive for tenants.

“Our members expect more landlords to be driven out of the market by rising costs, which will increase competition and push up rent costs. If we want to secure market stability in the new year, we need to increase stock, and making the market more attractive for buy-to-let investors is the only way this can be done.”

It comes as ONS data showed that annual rental growth in the UK remained at 0.9% for the fourth consecutive month during November.

In England, private rental prices grew by 1%, Wales experienced growth of 0.9%, while in Scotland rents increased by 0.5% in the 12 months to November 2018.

Rents in London were unchanged at 0.0%, but this was up from the 0.2% decrease in October 2018.

The UK annual growth figure was 1.4% when you exclude the capital.

Commenting on the data, Kate Davies, executive director of the Intermediary Mortgage Lenders Association, said: “Rental prices continue to be subdued and below the rate of consumer price inflation across much of the UK. Unfortunately, this disguises the fact that not all is well in the private rented sector.

“Buy-to-let lenders continue to sharply reduce their new investment in rental property as more landlords withdraw from an increasingly unprofitable venture. This isn’t a new phenomenon.

“Our 2017 white paper, ‘Buy to Let: under pressure’, showed that the series of tax and regulatory changes imposed on the buy-to-let market were stunting rental property investment, and this trend has continued through 2018.

“We continue to raise concerns that this will eventually work its way through to higher rents for tenants, which will in turn make it still harder for those who are trying to save for deposits to buy their own homes.”

Source: Property Industry Eye

Marketing No Comments

Halifax predicts stability in the market next year

Halifax has predicted broad stability anticipated in house prices next year with between 2% and 4% price inflation, though this is dependent on the Brexit outcome.

The Halifax UK Housing Market Outlook for 2019 also predicted shortage of homes for sale and low levels of housebuilding will continue to support high prices, constraining demand.

Russell Galley, managing director, Halifax, said: “The housing market in 2018 followed a similar trend to recent years. In line with our expectations, house price growth slowed whilst building activity, completed sales and mortgage approvals all remained relatively flat.

“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.

“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.”

The outlook found housing market performed in line with expectations over the past year, at the lower end of our forecast 0% to 3% growth.

Galley added: “Despite current political upheaval, and on the basis that it is still most likely that the UK exits the EU with a form of withdrawal agreement and transition period, we expect annual house price growth nationally to be in the range of 2% to 4% 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.”

Source: Mortgage Introducer