|Will 20-somethings be tempted by the promise of cheaper property?|
What would Brexit mean to the 65,600 Medway Property owners?
I don’t know about you, but I find if you read the Daily Mail, there are only three topics that make the blood boil of Middle England. Bureaucracy from Brussels, House Prices and the late Princess of Wales. Ignoring the late Princess if I can for this article, if we as a country were to unshackle ourselves from chains of Brussels (the first topic), could we inadvertently effect the second topic and make UK house values drop?
If you read all the newspapers, the Brexit debate seems to be focused solely on central London. Many commentators have said Brexit would mean central London would have a lower standing in the world, meaning less people would be employed in central London, with the implication of lower wages, fewer jobs in Central London ... but we are in Medway, not Marylebone or Mayfair!
Now, on the run up to the vote on the 23rd of June, I predict the ‘in’ camp will start to scare homeowners with forecasts of negative equity. The ‘out’ camp may appeal to the 20-somethings, who have been priced out of the property market with the prospect of a new era of inexpensive housing, should the fears of central London estate agents and developers, who believe the bottom will fall out of the market if we do leave, become real.
The only reason the Mayfair’s, Knightsbridge’s, and Kensington’s of central London are attractive to foreign buyers are political and economic stability, an open and honest legal system and a lively cultural life. None of that is threatened by Brexit.
But as I said, we are in Medway and central London is 34 miles away. We are home to Gillingham FC, Rochester Castle and Charles Dickens, so putting central London aside, what would an ‘in’ or ‘out’ vote really mean for the 65,600 property owners of Medway?
Initially, over the coming months, on the run up to referendum, I believe it will be like the run up to last year’s General Election. Often, with short-term uncertainty, big decisions are put on ice and people are less likely to make big money purchases i.e. buy a property. However, in the four months up to last year’s Election, property values in Medway increased by 1.65%, not bad for a country that thought it would get a hung parliament! So that argument doesn’t hold much weight with me.
Post vote, should the UK opt to leave Brussels, there would be a much more noteworthy impact. I believe that a vote to stay in the EU would see the Medway property market return to a status quo very quickly, but the contrasting result could lead to some changes. The principal menace to the Medway (and UK) housing market could be variation (in an upwards direction) in interest rates as a result of a Brexit, which could theoretically see the cost of mortgages grow swiftly, pricing many out of the market … but then two thirds of landlords buy without a mortgage, so that won’t affect them. Also, according to the Bank of England, 80.33% of all new mortgages taken out in 2015 had a fixed rate. Looking at all mortgages as a whole, according to the Bank of England, 44% of all UK mortgagees have a fixed rate mortgage, but 56% don’t, so if you aren’t on a fixed rate ... talk to your mortgage broker now, because rates can really only go in one direction
So in reality, if I really knew what will happen, I wouldn’t be a letting and estate agent in Medway, but a City Whiz Kid in London earning millions. However, I suspect whatever decision the electorate of Medway and the country as a whole makes, over the long term it won’t have a major effect on the Medway property market. We have seen off ‘the end of the world’ credit crunch of 2008/9 and subsequent property crash, the 1988 Nigel Lawson induced post dual-MIRAS property crash, the 1979 Winter of Discontent property crash, the 1974 oil crisis that stimulated another property crash ... hell, we can even go back nearly a century with the 1926 post General Strike slump in property prices.
Today, property prices are 246.59% higher than 21 years ago in Medway and are 9% higher than 12 months ago. So, make your own decision on 23rd of June 2016 safe in the knowledge that whatever the result, there might be some short term volatility in the Medway property market, but in the long term (and property investment is a long term strategy) there aren’t enough houses in Medway to live in either to buy or rent. Until the Government allows more property to be built, the Medway property market, will be just fine. Even if there is a little blip in the summer, there could be some property bargains on the run up to Christmas to be had!
For more advice and opinion on the Medway property market, even where those buy to let bargains could be found now please email me HERE
Spencer Fortag MARLA MNAEA
· Run up to the election for the Council Area – using Land Registry Figures between Feb 2015 and June 2015
· 1995 LAND REGISTRY FIGURES to get up lift in value – including the last year figure
· Number of homeowners - census 2011
· Bank of England figures – from their press releases and media
· MIRAS – the ending of tax relief on mortgages