When we consider the course of 2018, be it in the context of the property market or not, there is one overriding theme: Brexit. The financial uncertainty which has been prevalent throughout the last 12 months has been a key factor in the ups and downs that the property market has seen during the last twelve months. However, despite the perceived gloom, there was still an increase in property transaction levels, showing the resilience of the market.
Brexit or bust?
The overarching concern last year was the uncertainty around Britain’s future with Europe, and how that may affect the financial stability of the United Kingdom. Whilst there were some who predicted that the mere discussion of Britain’s exit from Europe would reap disaster in the property market, the reality has been somewhat different. Overall, asking prices across the country rose by an average of just over 0.7% during 2018 which shows that, despite the difficult conditions, gains have been reported. In addition to the slight rise in asking prices, there was also an increase in the number of transactions throughout the year.
“Despite the current economic uncertainty, it’s encouraging to see that there is still some increase in transaction levels,” said Oliver Blake, the managing director of Your Move. Investors have similarly maintained their interest and faith in the UK property market with 63% of investors regarding property as a safe and secure investment over the course of 2018, according to a survey conducted by Market Financial Solutions.
One major movement in the direction of the property market in 2018 was that of the emergence of regions outside of London in terms of property price growth. Traditionally, we have seen prices in the capital city increasing year-on-year; however, in 2018 it was Wales which returned the highest rise in asking prices at 6.2%, followed by the East Midlands at 5.1%. This strong growth in the regions has buoyed the property market in the UK overall, whilst market dormancy in London has offered a stellar opportunity for those looking to buy a home in the capital city.
In the rental market, demand from tenants increased steadily with rental yields also proving resilient through the year. Increased demand in the student lettings market helped to support the rental sector, as well as changing demands from students – such as fast internet and private bathrooms – who are now more prepared than ever to spend high on their accommodation. Knight Frank, the estate agent, says it is currently marketing &1bn of stock in student accommodation and that the demand is ‘ten times’ the supply.
A key moment in 2018 was the decision from the Bank of England to raise the interest rate from 0.5% to 0.75%, the highest single increase seen since March 2009. This decision was taken as part of a plan from the Bank of England’s Governor, Mark Carney, to steadily increase rates in order to shore up the economy – with expectations of a strengthening economy, solid employment levels and more consumer spending all playing a part in the decision to raise rates. The interest rate rise took place in order to keep the rising cost of living under control. However, for borrowers, this increase had consequences such as on a &150,000 mortgage an additional &224 in annual cost.
Overall, 2018 has provided some extraordinary headlines for newsmakers who have reported on a regular basis that the impact of Brexit has been irreparable. However, despite pockets of stagnation in the property market and a rise in interest rates, 2018 has remained a stable year in the face of uncertainty.
Looking into 2019, there remains a level of uncertainty due to the political situation, yet forecasts for the market are expecting stable over spectacular for the year – nevertheless, there are many who are predicting a post-Brexit boom with buyers and sellers rushing to the market once the dreaded March 29th takes place.