A new report from mortgage lender Nationwide has revealed that British house prices rose by just 0.5% during 2018, with prices falling by 0.7% during December. Uncertainty over the economic impact of Britain’s exit from the European Union seems to be the leading factor suppressing the market.
Nationwide’s Chief Economist, Robert Gardner, said that the slowdown was likely “attributable to the impact of the uncertain economic outlook on buyer sentiment.” Though the economic outlook was “unusually uncertain”, Gardner expected “UK house prices to rise at a low single-digit pace in 2019,” provided “the economy continues to grow at a modest pace, with the unemployment rate and borrowing costs remaining close to current levels.”
The housing market has been a major driver of the UK economy in recent decades with any slump treated very seriously due to the possibility of contagion into the broader economy.
House Price Betting Market
In response to the report William Hill has announced a new special bet, “What Will Happen To UK House Prices in 2019”. A rise in house prices is currently being offered at 4/6, while the odds of a fall are given at 11/10.
In September Bank of England governor Mark Carney warned government ministers that a “disorderly exit” from the EU could lead house prices falling by 33%. However, this is considered to be a worst case scenario, with most analysts forecasting modest price rises. Samuel Tombs from Pantheon Macroeconomics told the Independent that though, “the balance of demand and supply has shifted in buyers’ favour… we continue to doubt that a sustained period of falling house prices is likely.”