Throughout the course of 2018 it was clear to see that Brexit was the main talking point in regards to the UK housing market and this grew over the course of 2018.
The impact of the political uncertainty was decisive in influencing property price growth and rarely has it been easier to identify the main reason for the current Market behaviour. As the UK moves closer to March 29 with no deal in place the breaks are being put in place in the UK housing market with a reduction of transactional volumes as people adopt a wait and see approach.
With house prices nearing to halt, there are some signs of green shoots so there is little reason to cut all ties and run.
While the number of exchanges declined over 2018, the number of new prospective buyers registering rose by 5% according to the latest data by Knight Frank.
Also the ratio of new demand to new supply rose to 4.9 in the final quarter of 2018, the highest level in four years.
Following the large-scale rejection of Theresa May’s Brexit deal by UK MP’s, there have been a series of cross-party initiatives on the next steps and now a majority has materialised on how to achieve Brexit, something which a few weeks ago was not thought possible by the EU.
The presence of the Irish backstop in the withdrawal agreement is now the key focus of negotiations the UK government believes amending its current proposal is the best way to achieve a consensus. So there is now a clear path ahead on how to achieve an orderly Brexit back by the majority of MPs
While the political situation remains unstable, record high levels of employment at 4.0%, it has not been lower since December 1974 to February 1975 underline the strength of the UK economy.
Interest rates are also likely to remain low due to the political uncertainty and falling inflation, which should help liquidity.
This combined with the fact that the UK are still not building enough housing to meet the demand the underlying signs that there is pent-up demand the conditions for a recovery in the UK residential market are building.