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Newport sees biggest jump in house prices

Newport, South Wales, saw the biggest jump in house prices of any UK town or city in 2018, Land Registry data revealed this morning (February 14).

Average property prices in Newport increased by 10.6 per cent to £182,505 in 2018 while Aberdeen suffered the worst fall outside London, dropping 6.5 per cent to £152,799, the latest official statistics showed.

The average growth rate across the UK was 2.6 per cent last year, according to analysis by Gatehouse Bank, with 318 (78.3 per cent) of all 406 local authorities reporting prices increased in 2018, while 88 (21.7 per cent) saw them fall.

Top 10 performing towns and cities in 2018

TOP TEN 2018
Location Dec 2018 Change YoY (%) Change YoY (£)
Newport £182,505 10.6% £17,477
Merthyr Tydfil £106,228 9.7% £9,401
Nuneaton £181,987 9.3% £15,512
Warrington £201,446 8.6% £16,031
Corby £186,631 8.3% £14,268
Stirling £187,620 8.3% £14,443
Leicester £175,250 7.6% £12,436
Liverpool £137,163 7.3% £9,286
Edinburgh £260,221 7.2% £17,378
Sheffield £168,128 7.1% £11,183

Ten worst performing towns and cities in 2018

Location Dec 2018 Change YoY (%) Change YoY (£)
Aberdeen £152,799 -6.5% -£10,708
Eastbourne £228,774 -5.9% -£14,324
St Albans £501,817 -5.1% -£27,031
Watford £350,868 -3.1% -£11,149
Conwy £159,589 -2.7% -£4,464
Blackburn £108,379 -2.3% -£2,535
Darlington £129,985 -2.0% -£2,602
Basingstoke £301,158 -1.9% -£5,815
Barrow-in-Furness £115,481 -1.7% -£2,028
Harlow £272,324 -1.7% -£4,712

Charles Haresnape, chief executive of Gatehouse Bank, said: “It was an unpredictable year for house prices in 2018 and in the end, although the market only just outpaced inflation on the whole, there were still some stand out performances.

“Increases of 10.6 per cent in Newport and 9.7 per cent in Merthyr Tydfil are pretty striking when you consider the political instability that has weighed on the UK since the Brexit vote.

“Poor performances like that seen in Aberdeen, which fell 6.5 per cent, are proof that the cocktail of economic uncertainty, lack of housing supply and a raft of buyer incentives and cheap borrowing are creating a heady mix of outcomes across the country.

“Of course, a strong increase in one year is no guarantee of future success. Indeed, only three places in 2017’s top 10 appear in 2018’s top flight, with first place Cambridge dropping to 259th of all local authority areas last year.”

Source: FT Adviser

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UK house price growth slows to lowest level since 2013 as uncertainty rattles market

House price growth fell to its slowest pace in almost six years in December as uncertainty continues to weigh on the housing market.

UK house prices rose just 2.5 per cent year-on-year, marking the slowest annual growth since July 2013, according to new figures from the Office for National Statistics (ONS) and the Land Registry.

Growth was dragged down by a 1.1 per cent drop in prices in the east of England, while prices in the south also remained sluggish. Prices in London rose just 0.1 per cent.

The latest figures take the average property value in the UK to £230,776, while London retains the top spot for house prices, with an average value of £473,822. Across the UK, prices ticked up just 0.2 per cent month-on-month.

Mike Hardie, head of inflation at the ONS, said: “House prices continued to grow, albeit at the lowest UK annual rate since July 2013, with growth in the north east and London lagging behind Northern Ireland, Wales and the West Midlands.”

The figures are the latest reminder of the challenges facing the housing market, as both buyers and sellers have been impacted by economic and political uncertainty.

Data published yesterday by Lon Res showed prime property prices in the capital fell 5.7 per cent year-on-year in the fourth quarter.

More than 50 per cent of prime properties had their asking price slashed before being sold, the research stated.

Marc von Grundherr, director of estate agent Benham and Reeves, said the slowing market has been largely impacted by the decline in the value of flats.

“Whilst Brexit remains farcical, we should expect some volatility of course,” he said. “But our view is that given the relatively robust London market, there is cause for significant optimism in both values and transactions from the second quarter onwards.”

But Howard Archer, chief economic adviser to the EY Item Club, warned of continued difficulties as Brexit draws nearer.

“If the UK leaves the EU at the end of March without an approved Brexit deal, house prices could well fall by up to five per cent in 2019 amid heightened uncertainty and weakened economic activity,” he said.

Source: City AM

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House Prices Down 2.9%, Halifax Reports

House prices in the UK fell by 2.9% last month, according to Halifax’ latest report.

The January decrease comes after 2.5% growth in December 2018. House prices grew by 0.8% in the year to January, down from the 1.3% annual rise seen in December. This is the second time in the last three years that house prices have seen a monthly drop in the first month of the year. The average house price in the UK now stands at £223,691 by Halifax’ calculation.

“Attention will no doubt be drawn towards the monthly fall of -2.9% from December to January, the second time in three years that we have seen a drop as a new year starts,” said Russel Galley, managing director at Halifax.

“However,” he added, “the bigger picture is actually that house prices have seen next to no movement over the last year, with annual growth of just 0.8%.

“This could either be viewed as a story of resilience, as prices have held up well in the face of significant economic uncertainty, or as a continuation of the slow growth we’ve witnessed over recent years.”

Analysts have suggested the uncertainty surrounding Brexit is putting off potential buyers, and that the outlook of the UK’s housing market in 2019 will depend on the transition the country faces after we leave the EU on March 29.

“January is often a tough month, in which sellers who have failed to shift their home in the previous year typically cut the price in order to drum up interest,” said Jonathan Hopper, managing director of Garrington Property Finders. “But the confidence-sapping uncertainty of Brexit is getting worse, not better, and the next few months will be decisive.”

The significant role of Brexit in the slowdown of the housing market was reiterated by Mark Harris, chief executive of mortgage brokers SPF Private Clients. “Flat growth is probably the best we can hope for, given the current tricky political situation we find ourselves in,” said Harris. “Brexit has caused a slowdown in purchase activity as would-be buyers sit on their hands, waiting for the outcome before committing to something as major as buying a new home.”

Russell Galley said: “There’s no doubt that the next year will be important for the housing market with much of the immediate focus on what impact Brexit may have. However, more fundamentally it is key underlying factors of supply and demand that will ultimately shape the market.

“On the supply side the most constraining factor to the health of the market is the shortage of stock for sale, although this does support price levels. On the demand side we see very high employment levels, improving real wage growth, low inflation and low mortgage rates. All positive drivers tempered by the challenges of raising deposits. On balance therefore we expect price growth to remain subdued in the near term.”

However, some analysts are holding out hope that the housing market could yet see an upturn after the initial impact of Brexit.

Andy Soloman, founder and CEO of business growth advisers Yomdel, said: “The coming months are likely to bring some small green shoots of price stability and once we emerge from our Brexit blanket in to the cold light of day having reached an agreement, further stability and upward growth should return to the market.”

Source: Money Expert

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House prices start the year in a slump as Brexit weighs on the market

House prices suffered their biggest monthly fall since last April after dropping 2.8% between December and January.

The latest Halifax House Price Index shows it is the largest monthly drop since last April when average values fell 3.1%.

Price growth crawled upwards on an annual basis by 0.8% in January, putting average prices at £223,691.

Russell Galley, managing director at Halifax, said: “Attention will no doubt be drawn towards the monthly fall of 2.9% from December to January, the second time in three years that we have seen a drop as a new year starts.

“However, the bigger picture is actually that house prices have seen next to no movement over the last year, with annual growth of just 0.8%.

“This could either be viewed as a story of resilience, as prices have held up well in the face of significant economic uncertainty, or as a continuation of the slow growth we’ve witnessed over recent years.

“There’s no doubt that the next year will be important for the housing market with much of the immediate focus on what impact Brexit may have.

“More fundamentally it is key underlying factors of supply and demand that will ultimately shape the market.

“On the supply side the most constraining factor to the health of the market is the shortage of stock for sale, although this does support price levels.

“On the demand side we see very high employment levels, improving real wage growth, low inflation and low mortgage rates.

“All positive drivers tempered by the challenges of raising deposits. On balance, therefore, we expect price growth to remain subdued in the near term.”

Commenting on the figures, Lucy Pendleton, director of estate agents James Pendleton, said: “This is a handbrake turn as the monthly course of house prices reaches new heights of volatility.

“The air of political uncertainty and low supply is sending the market into a bit of a spin.

“The long-term holding pattern in prices ahead of Brexit is abundantly clear, and overall measures of consumer confidence have been scraping five-year lows.

“However, if the UK does enjoy a good EU exit, then a relief rally could be in store given the plentiful government support for buyers, cheap borrowing and rising wages coupled with low supply.”

Source: Property Industry Eye

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House prices in the UK are now falling – which is great news

House prices in the UK are now falling.

In the three months to the end of January, prices fell by 0.6% compared to the previous quarter, according to Halifax.

And on an annual basis, prices were up by less than 1%. Which means they are falling in “real” terms (ie after inflation).

It’s good news if you’re in the market for a house. And it’s good news if you think Britain could do with being a little less property-obsessed.

But will the good news continue?

House prices in the UK are in decline, however you look at it

The latest figures from the Halifax are actually a bit more upbeat than the last report from its nearest rival index, published by Nationwide. According to the building society, house prices rose at an annual rate of just 0.1% in January. That’s the slowest pace of growth in six years, and a “real” terms fall of more than 2% (depending on which inflation measure you prefer).

But one way or another, prices are flat or dipping.

This will be blamed on Brexit, because everything at the moment is being blamed on Brexit. But to be clear, this does not appear to be down to a massive drop in sales (“despite Brexit”, as the saying goes). In December, says Halifax, there were 102,330 house sales, which is “very close to the five-year average of 101,515.” Mortgage approvals are pretty close to the five-year average as well.

I’m not saying Brexit will have no effect. I’d be very surprised if we don’t at least see a “Brexit blip”, where people hold off making big decisions about moving until after a deal is done (assuming one does get done, of course). But the roots of the slowdown go deeper – put it this way, even if we had no intention of leaving the EU, I’m pretty sure the trajectory for house prices would be the same right now.

The fundamental problem for prices is that they went up too much. With banks a little more cautious on lending than they were during the bubble era pre-2008, and interest rates incapable of going any lower, prices had to hit a ceiling at some point.

On top of that, it has become much more expensive for certain groups of buyers to invest in UK residential property. Landlords are slowly having any tax benefits taken away from them, which has hugely reduced the appeal of property.

Indeed, I’m wondering how long it’ll be before the celebrity money interviews up the back of the Sunday supplements start to reflect this (when offered the choice between “property or pension” – a silly question on lots of levels – 99% still answer “property”, as you’ll see if you follow my colleague Merryn on Twitter – @MerrynSW).

But they’re not the only ones. Rich buyers of all kinds, but particularly rich foreign buyers, have been hit hard too – stamp duty on high-priced properties, plus an annual tax on property owned by companies (typically done by overseas buyers). As a result of all this, Savills reports that sales of properties over £5m have dropped by a third since 2014. More than anything else, this is what has hit the London market hardest.

What could make house prices crash?

Now that prices are falling, that tends to feed on itself. Just as in the stockmarket, everyone wants to buy at the bottom. When prices are rocketing, people panic to get in. When prices are falling, they take their time.

Yet, as I’ve said before, if the economy remains in decent shape, and employment stays as high as it is, it is hard to see any reason why prices would crash outright – to get a full-on crash, you need a large number of forced sellers, and at the moment, I don’t see an obvious way for that to happen.

One route to a crash is that people who own houses can no longer afford to keep them. This can occur in one of two ways. Either the mortgage holder loses their job (and thus their income) or interest rates shoot up, driving up the cost of all variable-rate home loans beyond affordability. These two are not mutually exclusive – indeed, they often go hand in hand.

But there is no obvious reason right now why we should expect a surge in unemployment or a surge in interest rates. There are scenarios in which these things become possibilities – a truly catastrophic Brexit for example, or a truly radical Jeremy Corbyn-led government. But for now those are low probability events.

The only potential significant contingent of forced sellers I can see is perhaps that subset of overstretched landlords who were taken by surprise by their tax bills this year. That is probably having some effect on the market, but not to the extent where we’ll see 1990s-style repossessions.

Another potential route to a crash is that the availability of credit dries up. This means that buyers simply can’t afford to pay the asking prices because the level of debt is not available to them. Again, though, in the absence of much higher interest rates, this seems unlikely. And in any case, a credit drought would usually lead more to a freeze rather than a crash – most sellers just sit on their homes rather than sell at a big loss.

So I can’t see a crash coming. But with buyers no longer gripped by property fever, and interest rates likely to rise modestly if Brexit doesn’t end in apocalypse, then I reckon we can expect prices to continue moving in the right direction – slowly downwards.

And that’s good news. If you want to take some of the heat out of the political anger gripping the nation, then rising wages and modestly declining house prices are one good way to do it without causing a lot of disruption. Fingers crossed.

Source: Money Week

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UK property prices in 2018 grew in Manchester but fell in London

  • Property prices in London fell by 0.2% in 2018, underlining the current lack of sentiment for real estate in the capital
  • However, research shows significant annual growth in prices in key regional cities, such as Birmingham and Manchester
  • Investors should look at areas where “affordability remains attractive and employment levels are rising” to achieve the highest levels of growth

The numbers confirm what many have accepted as the reality for some time now. In 2018, property prices in London fell. But, in other cities in the UK, it was a completely different story.

New data from online agent Zoopla shows that average prices in London last year fell by 0.2%, underlining the slowdown in activity the market has witnessed in recent months.

Prices reaching an affordability ceiling and increased purchasing costs are just some of the factors attributed to the slowdown, as London’s property market begins to look increasingly unattractive to many global investors.

“House prices in London have been falling for almost 12 months, while the rate of growth has slowed across cities in southern England, a result of growing affordability pressures, higher transaction costs and increased uncertainty,” analysed Richard Donnell, Research and Insight Director at Zoopla.

But, the research shows high growth has been recorded in other UK cities. Since June 2016, property prices in Manchester have increased 15%, while there’s also been a 16% uplift in average prices in Birmingham, too.

Donnell added: “The strongest performing cities are outside south eastern England where affordability remains attractive and employment levels are rising. We expect current trends in price growth to continue across the rest of this year, with prices rising in line with earnings for much of the UK but lower growth and some house prices falls in London and the South.”

With increased levels of commercial investment and job numbers, more people are moving to live in Manchester – and this is having a significant impact on the performance of the city’s undersupplied property market.

In addition to capital growth, investors in Manchester are also enjoying better yield growth from their property, compared with those with real estate in London.

The latest figures from LendInvest’s rental index suggest that average yields in Manchester are currently 69% higher than the average for the Greater London area.

Source: Select Property

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Is a slowdown on the horizon for the housing market?

KPMG’s latest UK quarterly Economic Outlook Report has revealed that the prospects for the UK housing market remain consistent with the broad slowdown in house-price growth identified in the firm’s September edition of its Economic Outlook.

Overall, house prices in the UK increased by 3.5% in the 12 months to September 2018 and the strongest growth, of 6.1% and 6%, was in the West and East Midlands – which is a real boon for the region.

Siobhan Lodder, partner and head of real estate at KPMG in the Midlands, said: “Our analysis reinforces the importance of local infrastructure and connectivity, with billions being invested to improve roads, rail lines, schools and hospitals in the region and these continue to be crucial drivers for house price growth.

“A number of towns and cities across the Midlands are undergoing regeneration and deemed ‘up and coming’ and already these are noting rising house prices. These factors drive perceived attractiveness and ultimately create a virtuous circle of growth. Regional business hubs like Birmingham, Nottingham and Coventry are benefiting from the exodus of talent leaving London to start a life where the job prospects are good and the cost of living is cheaper.”

The analysis also showed that the London region remains the most affected, house prices fell over the same period by 0.3%. KPMG continue to expect that the fastest growth of house prices will take place in Scotland, increasing by 4.9% in 2018. This is in line with the latest data and would represent a moderation from a current rate of growth of 5.8%.

Lodder continued: “The rebalancing of property prices appears to be a key takeaway of the latest house price projections for the next five years, but we know that the UK’s housing market is a complex affair with multiple moving parts. The supply and demand of affordable housing continues to be out of kilter for the time being, however the government has been very vocal about its efforts to counter this.

“Local infrastructure and connectivity are increasingly incentivising would-be homeowners to look beyond London. Whilst places like Scotland, the West Midlands and the East Midlands have not yet reached the levels of London and the South East, they are relatively more affordable. London house prices by comparison, have stagnated somewhat, no doubt the result of high valuations set against a backdrop of an uncertain economic outlook.

“Expectations of further interest rate increases and wider uncertainty will continue to temper price rises, particularly in the second hand home market which does not benefit from the artificial buoying of help to buy.”

Source: The Business Desk

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What does 2019 hold for UK house prices?

Last year was a good one for anyone who’d like to see some sanity injected into the UK’s housing market.

By the end of the year, house prices had risen by about 2.8% if you go by the Office for National Statistics data to November. Or 1.3% if you use the Halifax price index for the year. Or just 0.5% if you use Nationwide.

With inflation (as measured by the Retail Price Index) at 2.7%, and more importantly, wages at above 3%, this means that house prices are flat or falling in “real” terms – ie, after inflation.

That’s good news. But will it continue?

Why gently falling house prices are a good thing

British property owners have enjoyed a couple of decades of boom time. Using borrowed money to buy a property in Britain – ideally London – in the mid-to-late 1990s was a life-transforming financial decision for many people.

Every year, your house made much more money than you did. And if you were reasonably careful, that gain was tax-free, unlike your pay packet.

So some people will question why it’s good news that prices are now flat or falling. I’ll explain quickly.

A house is not an especially productive asset. If we all spend our time fretting about how on earth we’ll ever be able to afford to live in a moderately acceptable dwelling place at a humanly bearable distance from our place of work, then that’s a terrible waste of energy.

It’s also become a big political issue. Young-ish people are fed up with being unable to afford to buy a place of their own, or having to live in fear of the whopping amounts of debt they need to take on to do so. Therefore, there’s a lot of anger, and a lot of desire for the government to “do something”.

As a result, we’re in danger of misallocating a lot of resources badly to sort out a problem that has ultimately been caused by overly loose monetary policy interacting with pro-housebuilder government intervention, bad incentives for banks (it makes more sense for them to give you a loan to buy a house than to start a business, for example), and a government dependent on the tax take from the housing market.

The solution here is for house prices to come down. The problem is that house prices have a big impact on lots of things that go well beyond the property market.

A slide in house prices will hit the tax take. It will hit banks’ balance sheets. It will make people who own houses feel poorer and spend less. It will decrease labour mobility even further because people can’t move when they are in negative equity (ie, they owe more than their house is worth).

What’s the painless way to boost affordability and defuse the justified anger? It’s for wages to go up while house prices stay static. That way, balance sheets don’t get slaughtered, but the problem gradually goes away.

That’s why it’s good news that house prices are finally lagging wages. The question is: will it continue?

Estate agents are feeling very gloomy

Estate agents and surveyors questioned by the Royal Institute of Chartered Surveyors (RICS) certainly think so, at least for now. Their expectations for house sales over the next three months are the worst they’ve ever been since the RICS survey began in 1998.

Bear in mind that this includes the 2008 financial crisis period. That’s quite a striking statistic. Is Brexit really as grim a prospect as the banks shutting down? Obviously not.

However, you can see why the existence of the 29 March deadline might well have encouraged a lot of people to delay (although I strongly suspect that it’s going to be moved further out).

Just like stock pickers, potential homebuyers all want to time the market. They are now aware that prices are falling or growth slowing. No one wants to buy before they’ve hit the bottom. So holding to see what happens with Brexit is likely to appeal to more people this close to the deadline than it might have a year ago.

Thing is, this will either leave pent-up demand for later in the year, or the deadline will get pushed back and people will just have to make decisions. So while I can agree that Brexit might be having an effect just now, it’s more about timing than fundamentals.

So what can we expect this year? Really, I think it’s more of the same. The crackdown on landlords is not ending any time soon, and I think that’s one of the key drivers of the shift in the market. Essentially, a big chunk of demand has been knocked out of the market which should make life that bit easier for standard residential buyers.

And with borrowing costs unlikely to fall any further, it’s hard to see where the impetus for prices to rise could come from. Equally, without a surge in borrowing costs or a nasty, job-shredding recession (which I suspect is still a bit away), then there won’t be a spike in forced sales. So that indicates that price falls will be gentle.

Odd as it might seem, the biggest risk to the housing market this year could be that Brexit goes well. In this context, “going well” probably merely means reaching a deal of any kind that puts us on a clear, moderately predictable road to an outcome. At this point, I think the more objective observers (international investors) would just like to know what’s going to happen.

On the one hand, you would see an improvement in risk appetite; no doubt about it. If you have foreign investors who have been contemplating exploiting the weak pound to buy, then they would have to move fast. So you might get a rally there.

On the other hand, it would make life a bit harder for the Bank of England. Interest rates are still extraordinarily low. If the Brexit uncertainty lifts, interest rates might have to head at least a bit higher from here. I wouldn’t expect anything drastic (rising sterling would keep a lid on inflation for a bit). But it certainly wouldn’t make mortgages cheaper.

Overall, maintaining our current course – with house prices flat or gently falling, while employment remains strong and wages rise – is still the least painful way to get a correction in the property market. And looking at the variables, it still seems to me to be the path of least resistance.

Let’s hope it continues.

Source: Money Week

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London house prices fall as UK homes grow in value

London house prices fell 1.2 per cent month-on-month in November, official data revealed today.

Homes in the capital also experienced the greatest annual fall as they dove 0.7 per cent year on year in November, according to HM Land Registry figures.

The drop left the average London home priced at £472,901.

That contrasted with UK house prices, which dropped 0.1 per cent in value compared to October but rose 2.8 per cent compared to 2017, with the average property price hitting £230,630.

In England, house prices grew year on year by 2.6 per cent with the average home costing £247,430.

Property experts warned that further falls are likely after yesterday’s Brexit drama, in which parliament handed Theresa May’s government a historic defeat on her withdrawal agreement.

“House prices in the capital have been cooling for some time but there’s potential for a more serious correction following May’s crushing defeat on Tuesday night,” said Mark Dyason, managing director of Thistle Finance.

“The odds of a disorderly, if not chaotic Brexit, have just shortened considerably and London, with its exposure to international business, is in the line of fire.

“Many of the regions beyond the capital have a Brexit buffer in that they didn’t experience the obscene growth trajectory that London did several years ago.”

Business growth firm Yomdel added that now political headwinds have hit “gale force”, both buyers and sellers are likely to change their behaviour in the short term.

“We will no doubt see many buyers and sellers batten down the hatches until further notice but once stability does returns, it won’t take much for the UK property market to dust itself off and activity to pick up once again,” chief executive Andy Soloman said.

“The question is, how much damage will have been done before we reach this point and how long will it take to rebuild?”

Source: City AM

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2019 Property Forecast: Here’s what the experts are predicting will happen to house prices next year

It’s that time of year again, when people guess what’s happening next year. Only, it’s particularly entertaining this year because no one really knows what’s going to happen next week.

Still, most of the UK’s big estate agencies have had a go, looking at house price growth in the UK and abroad, what effect Brexit will have, new trends in the market and how things like interest rates and buy-to-let restrictions will affect the market in 2019 and the next five to 10 years. We picked out some of the highlights so you can get an overall picture of what property industry experts think is going to happen to the value of your flat.

House Prices

Unbelievably, considering the currrent Brexit chaos, house prices are still growing in the UK. Not by much, though; only 0.3 per cent in November, up 1.4 per cent from the start of the year according to Nationwide.

Next year, JLL says they expect an initial slump at the beginning of next year, showing 1 per cent growth in the first six months, then picking up in the second half to make 1.5 per cent growth by the end of the year. This should grow to 11 per cent in the next five years, says Adam Challis, head of UK Residential Research. “With UK earnings growth set to return to a more normal rate of 4 per cent per annum by 2021, real wage growth and more modest property price increases will unlock transactions that have been hampered by a lack of affordability.”

Strutt & Parker is even more optimistic, forecasting 2.5 per cent growth for 2019 and five year growth of 18 per cent, though they caveat this heavily. “Beyond 2019, it is extremely difficult to forecast the market with any certainty and we would expect some bounce back once more stability has returned. The fundamentals of the UK economy remain broadly positive, with sentiment remaining cautious,” says Stephanie McMahon, head of research at Strutt & Parker. Its best case scenario for London in 2019 is 2 per cent, rising to 20 per cent in five years, with a downside risk of minus 5 per cent.

Savills is more cautious, sticking to 1.5 per cent in 2019, rising to 14.8 per cent in five years. Should Brexit be miraculously solved, London and the south east will be the first to reap rewards from the new sense of certainty.

Interest rates could be another spanner in the works. Following the increase from 0.5 per cent to 0.75 per cent in August, Strutt & Parker’s forecast says it expects interest rates to rise gradually in the next few years, reaching 2 per cent by 2021, increasing the cost of mortgages to many households.

“Assuming that – as most economic forecasters are suggesting – we avoid a full-blown recession, then interest rates are probably the bigger of the two variables,” says Lucan Cook, director of research at Savills, the other variable being Brexit, of course.

Places to invest

In the London, this is fairly straightforward. CBRE’s Hot 100 report using Land Registry and Rightmove data shows that Islington was London’s top performing borough for house price growth last year, recording a 7 per cent increase. Redbridge and Richmond come in joint second with growth of 5.7 per cent. Not far behind are suburban, more ‘affordable’ boroughs like Newham, Ealing and Merton.

Knight Frank’s Prime Global Forecast 2019 says that price growth in luxury locations is still relatively low, thanks to a cocktail of regulations, Brexit, the rising cost of finance, and even over-supply in some cities. Its ones to watch next year are Madrid, Berlin and Paris, all with predicted growth of 6 per cent. Prices in Hong Kong, where to loan-to-value ratios could be relaxed, are predicted to fall by 10 per cent, and Mumbai prices could fall by 5 per cent due to a developer tax on unsold inventory.

Its main advice, however, is to follow the tech-start ups and invest in non-traditional residential like retirement communities, student accommodation and build-to-rent, which are set to outperform the wider market.

Knight Frank also predicts 2019 will be the year San Francisco, Chicago, Dallas, Beijing and Shanghai join the ultra-prime cities club.

Source: City A.M