PART I: The Global Macro Factors

Time and again, I am asked: What about the future? What can you tell me about what will happen tomorrow? Next week? Next month? Next year? 

In this series, I will be doing just that and forecasting the near-term future of housing prices here in the UK and for 2019. In the dangerous game of divining the UK housing market for the upcoming year, I will break down all the key factors that could have a significant impact and explain the trends that seem to be arising and their significance.

So, firstly, some definitions and ground rules:

House prices – This will be taken to mean the median price change of residential property, in aggregate, not weighted by value. So, if a £1m house goes down 10% and £100k house goes up 10%, the median change is 0%, not -9%. 

The UK– Meaning all of what is currently considered the United Kingdom, regardless of what happens with any EU issues around Northern Ireland and Scotland. 

2019– The timespan beginning 1 January 2019 and ending 31 December 2019. 

What do we know about the inputs that will be affecting our forecast and defining our trends?

Well, from a macro perspective, I will analyse the external influences on the UK housing market. That is to say, the major factors affecting strategy and decision-making within the market, which are beyond our control.  The specific factors I will focus on for the purposes of this series are: global economic outlook; UK economic outlook; inflation; interest rates; auto-correlation of activity; and, supply and demand. 

From a micro perspective, I will consider individual expectations of the housing market, as well as trends such as changes in fashion and personal wealth.