Even
the sanest person in Britain has to admit the Brexit vote will, in one shape or
another, affect the UK Property market. Excluding central London which is
another world, most commentators according to Denton House Research are saying
prices will be affected by around 10%. So looking at the commentators’ thoughts
in more detail, property values in Mid Sussex will be 10% lower than they would
have been if we hadn’t voted to leave the EU.
As the
average value of a property in the Mid Sussex District Council area is
£350,100, this means property values are set to drop for the average Mid Sussex
property by £35,010. Batten down the hatches, soup kitchens and mega recession
here we come. It’s going to get rough.
But
before we all go into panic mode across Mid Sussex, the devil is always in the
detail.
Look
at the phrase again, and I have highlighted the relevant part “Property values in Mid Sussex will be 10%
lower than they would have been if we hadn’t voted to leave the EU”.
Property
values today, according to the Land Registry are 14.45% higher than a year ago
in the Mid Sussex District Council area. The 12 months before that they rose by
6.75% and the 12 months before that, they rose by 8.3%. If we hadn’t voted to
leave, I believe on these figures, we could have safely assumed Mid Sussex
house prices would have been 12% higher by the summer of 2017.
That’s
the point, we won’t see a house price crash across Mid Sussex it’s just that
house prices in a year’s time will only be 2% higher than they are now (i.e.
12% less the 10% lower figure because of Brexit). Let’s look at the historic
figures and how that compares to today’s figures for the Mid Sussex District
Council area as a whole.
Average
Value of a property 20 years ago £
74,600
Average
Value of a property 10 years ago £238,500
Average
Value of a property 2 years ago £286,600
Average
Value of a property 1 year ago £305,900
Average
Value of a property today £350,100
Projected
Value of a property in 12 months’ time £357,100
Therefore,
I believe the average value of a Mid Sussex property will be £7,000 higher in
12 months’ time than today.
That’s
not to say Mid Sussex property prices might not dip slightly in the run up to
Christmas, in fact they always have done just about every year since the year
2000 and most of those were boom years. In 12 months’ time this is my
considered opinion of where Mid Sussex property values will be and looking at
the historic prices, even if I (and many other property market commentators)
are wrong and they drop 10% from today’s figure, in the whole scheme of things,
we have been through a Credit Crunch, Black Monday and 15% interest rates over
the last 20 to 30 years, and still Mid Sussex house prices have always bounced
back.
Whilst
the UK's vote for Brexit has created an uncertainty in the Mid Sussex housing
market, there is no need to panic and prospective buyers should merely use
common sense about their purchases. I always say to people to be prudent and if
you are taking out a mortgage, at some stage during the life of that mortgage,
circumstances will be difficult. We won’t have a 2008 Credit crunch fire sale
of properties because after the Mortgage Market Review which took place in the spring
of 2013, mortgage borrowers are not as highly leveraged this time around. As a result of this, with any luck there will
not be too many distressed sales, which cause widespread price reductions.
So
what of Mid Sussex landlords? They have recently been thrashed by Osborne’s tax
changes, but yields could rise if Mid Sussex house prices fall/stablise and
rents grow, and this might also make it easier to obtain mortgages, as the
income would cover more of the interest cost. If prices were to level or come
down that could help Mid Sussex landlords add to their portfolio, as rental
demand for property is expected to stay
strong as more people find it more and more difficult to obtain mortgages.
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