Has the UK housing market peaked?

Author: Dave Mills

As we enter 2019 there are contrasting reports about the state of the UK housing market. On one hand, December 2018 recorded the slowest annual growth rate since 2013. However, mortgage lender Halifax has since predicted a swift recovery in 2019, with annual increases in house prices of up to 4%. So, is the stagnation over? Will 2019 see a return to house price growth above the general rate of inflation? Or are we on the verge of a major house price crash? At Compass we don’t have a crystal ball, but we can add context to help you interpret the situation more accurately. Here’s what you should know…

Who reports house prices?

There are four main sources of house price information in the UK.  These are the Nationwide and Halifax indices, which are based on mortgage lending, the Office for National Statistics (ONS) figures, which reflect sold prices, and the Rightmove index, which is based on asking prices. In order to evaluate the bigger picture on house prices you should consider all these measures both individually and together. They are unlikely to show wide discrepancies, and differences can usually be attributed to the publisher’s short-term perspective of the UK housing market. The figures simply represent a snapshot of a moment in time. Arguably the most important indicator is the ONS figure because this reflects the prices that have actually been paid.

What’s happened in recent years?

Since the last major decline in house prices in 2007/08, the average asking price has stabilised and then grown rapidly since 2013. House prices in London saw incredible growth, which is why it’s hardly surprising these were the first to see stagnation and eventual decline. Most of the South and South-East of England saw rises of around 30-35% over five years, before returning to a much more modest rate of growth recently.

What about Brexit?

With Brexit still scheduled for March 29th, deal or no deal, there remains a massive cloud of uncertainty obscuring everything related to business, finance and industry in the UK. We simply don’t know what will happen after that date. The Bank of England Governor Mark Carney warned recently that a no deal Brexit could see an astonishing 30% or more knocked off house prices. Some investors had already lost confidence and put their properties up for sale in case Brexit bursts the housing bubble. However, savvy buyers have been wary of paying too much in the uncertain climate, which is perhaps one reason why the number of completed sales has decreased. As a result, the traditional gulf between what sellers want and what buyers are willing to pay seems to have widened.

What the expert said:

David Mills from Compass said:

“Brexit means we’re living in unprecedented circumstances of economic uncertainty. In fact, it’s the kind of uncertainty you would normally only expect in times of war.

“Importantly, all the main indicators of house prices should be taken with a pinch of salt. Together they are useful in establishing the direction of travel within the housing market, but little else.

“First-time buyers might be wise to wait and see what happens with Brexit before setting foot on the ladder, just in case… However, if Halifax is right about a 2019 bounce, then waiting would look like a bad idea in hindsight.

“The simple fact remains that demand is still outstripping supply in the housing market, and that doesn’t look like changing any time soon. Nevertheless, it’s worth reminding ourselves: houses are only worth what people are willing to pay for them.”

You can find out more about personal finances and products that can help you support them, including loans and mortgages, by contacting us via phone or email now.

Why not get in touch today?

For a friendly, confidential and without-obligation conversation

Get in touch

Your home may be repossessed if you do not keep up repayments on your mortgage.


Thanks for getting in touch with Compass Personal Finance, we'll be in touch very soon. If you'd like to speak to someone in the meantime feel free to give us a call on 01489 578338.