Depending on the pricing it could very well be 2018 which would represent a full 5th year among game systems but that would be unprecedented since the highest selling home systems peaked such as PS2 and Wii peaked in their second year ...

I find this very doubtful, considering the rumored November numbers. 

$199

Sales or game quality? I doubt sales will increase much from their current levels.

Game quality might though. If 2019 sees The Last Of Us 2, FF7 remake and Elder Scrolls 6 and GTA 6 all in the same year, that'd end up being the best for PS4 I imagine.

There are a few thing to consider
1)The economy improved in 2017. Q2 and 3 saw 3 percent growth. Q4 will also be good. It's the most consistent year since the great recession started
2)PS4 Pro inflates the numbers through double counting. If I own a PS4 and buy a PS4 Pro, I'm adding two sales but I'm one customer. I should note this is happening with XBox One and will happen to the Switch as well
3)Good games in the early part of the year helped.

The stars were aligned for a good year. This year would have been the decline (assuming Dec isn't catastrophic of course) and this is reflected in Sony projecting fewer shipments. Originally it was only 18 million and Sony upped it to 19 million. 2018 will see a decline. While the economy will still be strong, PS4 Pro numbers will decline (due to time) and the selection of games may not be as strong.

At the beginning of the year i said 2016 was the peak year since it was flat from 2015 but 2017 ended up doing much better than i thought.

Now im going to say 2017 is its peak year but who knows, a permanent price cut to $199 could make 2018 its peak.

Yes but in November 2015, it had no competition and won almost all three regions with ease. Its grip has slipped mightily since then. If you aligned sales between Switch and PS4 since Switch launched and looked at marketshare it's a vast slide for Sony compared to Wii U and PS4. So it's "peak" as far as year-to-year marketshare is far, far over. 

Which means nothing. If the PS4 is selling like crazy Sony doesn't care if they outsell everyone else by a foot or by a mile. Plus, the Switch has had no decernable effect on PS4 sales which likely means that there's very little overlap in their target audience. If they aren't pulling from the same customer pool how is the Switch supposed to make the PS5 come sooner?

So its grip slipped mightily despite probably having its best November?

So PS5 is coming next year? Interesting theory. I mean they just had their best year yet and the PS4 is selling very well but they’re going to announce a PS5 in February?