What could 2018 mean for the housing market? That is a question on the minds, not only of those looking to buy or sell a house, but the whole housing industry.

Given the current level of political instability and the miasma around the Brexit negotiations, together with property prices that are no longer growing quite as quickly as they were, it is a very pertinent question. So, let’s see what the experts think.

The housing market, where we are and how we got here.

For clues to the cause of activity, or lack of it, in the housing market, it helps to look at what is going on in the economy more generally. The laws of supply and demand invariably kick-in when anything in demand is in short-supply, and estate agents report, that despite their own best efforts to stimulate the market, there has been a lack of new properties for sale. This scarcity appears to have reversed the existing decline in house prices, caused most likely by barely perceptible wage rises, low mortgage rates failing to live up to homebuyers’ hopes that they would fall further, and the uncertainty surrounding unanswered key questions about what life might be like after we have left the European Union. The outcome, a recent increase in the rate of growth in house prices, has caught most by surprise.

Interestingly, estate agent Jeremy Leaf agrees, that rather than strong demand, it is the factors referred to above, plus a lack of new builds, that has been the catalyst for the rise in house prices.

Regional differentials.

Any assumption that London region acts as a bellwether for the housing market, is, according to its current situation wrong. As house prices on average nationally rose by 2.2% between June and September, they fell in London, leaving it the weakest performing region for the first time in twelve years.

The overall picture is one of regional differences in house prices narrowing, although growth rates in the south have slowed, in the midlands and north-west they are growing steadily. London still remains the most expensive area in which to buy a house, likely to be well above the national average of £210,982.

First-time buyers in the housing market.

It is difficult to predict why young people living with mum and dad, or in rented accommodation are no longer applying for their first mortgage at a rate they once did. Perhaps the financial turmoil the country has found itself in over the past ten years has caused them to exercise greater prudence before taking on such a large and expensive commitment, particularly at a time when house prices are rising at a disproportionate rate to wages. Nevertheless, a nine-month low and 65,000 fall in mortgage applications in June was noticed by James Pendleton, estate agent, who commented that the “annual growth rate has been broadly shrinking like a tyre with a slow puncture since the middle of last year”.

The next two years.

Despite factors which would indicate the contrary, such as reductions in the numbers aiming to buy-to-let due to changes to stamp duty, people choosing to remain in their own homes and the failure of the construction industry to build new homes at a rate that compensates for historical shortfalls, a rise in property prices for all regions is predicted. Countrywide predict this should manifest as an increase of 1.5% and 2.00% for 2017 and 2018 respectively, despite continuing instability in the political sphere and likely Brexit outcomes.

Brexit outcomes.

The outcome of Brexit - which is inexorably tied up with the political situation and is likely to, one way or another, bring an end to the current instability - determine the future direction for the economy and consequently, the housing market. The hope is that a positive resolution should restore confidence, people may once again put their houses up for sale with the aim of moving-up and a greater number of first-time buyers should apply for mortgages than at present. For the moment however, the situation is unlikely to change. As Matthew Poole, a senior mortgage consultant at Eddison Wells put it, “I’d imagine we’ll see a similar trend that we have in 2017. With a lack of supply I’d suggest that prices are unlikely to drop as there could be a lot of competition between buyers for available properties."

What does it all mean for me?

If you are planning to move home, ask yourself whether you can’t wait a little longer until the economic and political situations are more stable. If you can't, then take an in-depth look at your finances and what the impact of a monthly mortgage payment would have on them.

Eddison Wells is a mortgage brokerage with locations across the UK, and they have a team able to advise on a wide range of financial products. Providing the highest quality service at the most affordable price is a prerequisite and a firm ethos. If you’re thinking of taking your first mortgage, call now on 0800 808 9981 - a member of their team will be willing to help, and provide advice based on your own circumstance.