I’m hearing lots of stories about Brexit and constantly being asked what effect will it have on the local property market. So far, I’ve been non committal in my views about the subject , so as not to add the adverse commentary being banded about in the press. However , I realise that it’s a topic that homeowners and landlords in Southgate and Oakwood are interested in.
The property market or more like the value of one’s home is an obsession amongst the British home owning public.
The scaremongering that the outcome of the Brexit negotiations will lead to a sharp fall in property values in Southgate and Oakwood (and nationally) were unfounded, although prices have fallen in the past couple of years in the local market.
Now, it’s true that there are less listings and fewer sales being agreed with property values rising at a slower rate in 2018 compared to the heady days of the first half of this decade. This brings me neatly on to looking closer at what has actually happened in the past couple of years since the Referendum.
Southgate and Oakwood house prices have risen by 8.67% since the EU Referendum
…and yes, in 2018 we are on track (and again this is projected) to finish on 212 property transactions (i.e. the number of people selling their home) … which is less than 2017 however, the number of average sales per year have been falling consecutively since 2006. This has also seen an upward pressure on house prices in the local area.
(Source: Rightmove and Land Registry)
The UK property market is centred on the Economy and its jobs and salaries that drive the marketplace.
Despite the criticism of the deal that is on the table right now, it will be better than a No Deal scenario which will cause inflation to rise, wages to fall and import taxes to rise. In effect, that will damage the Economy and falling house prices will be the knock-on effect.
Going back a decade; we had the global financial crisis with the credit crunch. Nationally, in most locations including Southgate and Oakwood, property values dropped by 15% to 20% over an 18-month period. If the Brexit deal doesn’t bring about the expected outcome (It still needs to pass in the House of Commons), house prices will fall back to the levels of 2009-2010.
And let’s not forget that the Bank of England introduced some measures to ensure we didn’t have another bubble in any future property market. One of the biggest factors of the 2009 property crash was the level of irresponsible lending by the banks. The Bank of England Mortgage Market Review of 2014 forced Banks to lend on how much borrowers had left after regular expenditure, rather than on their income. Income multipliers that were 8 or 9 times income pre-credit crunch were significantly curtailed (meaning a Bank could only offer a small number of residential mortgages above 4.5 times income), and that Banks had to assess whether the borrower could afford the mortgage if interest rates at the time of lending rose by three percentage points over the first five years of the loan … meaning all the major possible stumbling blocks have been mostly weeded out of the system.
A lot of homeowners in Southgate and Oakwood might wait until 2019 to move, meaning less choice for buyers, especially in the desirable pockets of the area. For Buy to let landlords, tenants are also likely to hang off moving until next year, although I suspect (as we had this on the run up to the 2015 General Election when it was thought Labour might get into Government), during the lull, there could be some Southgate buy to let bargains to be had from people having to move (Brexit or No Brexit) or the usual panic selling at times of uncertainty.
Brexit … in the whole scheme of things is another significant event to history in a decade. Looking in recent history we have survived the Oil Crisis, and 20%+ hyperinflation in the 1970’s, Mass Unemployment in the 1980s, Interest Rates of 15% in 1990’s and the Global Financial Crash in 2009. The fact remains that people still need houses and a roof over their head, and as it stands, there are more people than houses.
If property values drop, it is only temporary, you may lose some money when selling, though if you are buying a larger home or in a more expensive area, the price falls will be comparatively higher, therefore you upgrade at a discount. Long term, we aren’t building enough homes, and so, as I always say, property is a long game no matter what happens – the property market will always bounce back.
If you want to know more about the Oakwood and Southgate Property Market give me a call for a chat on 020 8366 9777.
If you are looking for an agent with experience that can help you find the right tenant or buyer for your property, then contact me to find out how we can get the best out of your home or investment property. Email me [email protected] or give me a call on 020 8366 9777.