"What will happen to house prices in 2019" is a question we hear a lot at the moment.
With the uncertainty of Brexit though, it's not an easy question to answer.
This post looks at predictions from a range of sources on how house prices will fare under various Brexit scenarios.
Where we are now?
Theresa May’s Brexit deal suffered a historic and humiliating defeat in Parliament last week, so as yet there is no sign that the uncertainty is about to come to an end.
The property market isn’t doing it’s best at the moment, either.
The Guardian reports that house prices are currently falling at the fastest rate in six years.
In the same article, The Royal Institution of Chartered Surveyors are quoted as saying that sales volumes are "dwindling". They also that forecast sales expectations are "flat or negative" across the UK in the first quarter of 2019.
Since the Brexit referendum average UK house prices have climbed, from £212,887 in June 2016 to a peak of £232,797 in August 2018.
It is worth noting that the rate of growth in house prices is the lowest it has been since 2013, at 3.1% in the year leading up to July 2018.
The most recent data from the Office of National Statistics put prices slightly lower than the peak, at £230,630 in November 2018.
What is causing this slump?
The main culprit is uncertainty. All the time there is not a clear outcome for Brexit, the market is unsure how to respond. It has been described as "treading water" by Andrew Burrell of Capital Economics, in a BBC article.
All of this combines to create a situation where people are sitting tight and waiting to see how Brexit unfolds before selling.
This means lower supply of houses as well as lower demand from buyers: a situation which can slow down declining house prices but also reduces the amount of people who decide to move.
Housing experts vary in their predictions about 2019 house prices. A panel representing mortgage brokers, commentators, economists, surveyors, and lenders gave a spectrum of predictions from 5% fall to 4% rise. So it's anybody's game.
The Bank of England have created various scenarios for Brexit which predict larger drops:
In a "disorderly Brexit", house prices are forecast to fall by 30%. In this scenario World Trade Organisation rules are implemented, no new trade deals are established, and the UK is excluded from existing trade agreements.
In a "disruptive Brexit", house prices are forecast to fall by 14%. In this scenario the UK retains access to some existing trade agreements.
For reference, the drop caused by the 2008 financial crisis was 17% "from peak to trough".
It’s important to note that these scenarios are models, and were not designed to be reported as news. Understanding how the Bank of England perceive the situation is insightful, though.
So what’s the answer?
In short, we can’t say for sure. The general consensus leans toward house prices dropping, and current market performance isn’t doing much to suggest otherwise.