Most economists and articles discussing the effect Brexit will have on the property market are based on the London property market both commercial and residential. Why would they be bothered about what will happen in Bedfordshire or Yorkshire ?
I am yet to be convinced that an economist’s long term prediction is to be relied upon. Yes in the short term maybe up to 2 years it is possible to predict fairly reliably what is likely to happen, but longer than 2 years and history shows that predictions are usually incorrect, are then blamed on unforeseen influencing factors and new predictions produced. There will always be ‘unforeseen influencing factors’ just ask a weatherman to predict next week’s weather.
Most economists and articles discussing the effect Brexit will have on the property market are based on the London property market both commercial and residential. Why would they be bothered about what will happen in Bedfordshire, Cheshire or Yorkshire ?
The London property market has seen huge investment and purchasing from Russian and Chinese millionaire’s and rich eurozone citizens looking to escape the sovereign debt crisis. In the last 10-15 years they have often bought off plan a property that they might even leave empty. Indeed 49% of investors in central London property are foreign. If as predicted by the economists the value of Sterling should fall those already invested in London may choose to sell up rather than watch their assets lose value.
Last week the Bank of England and International Monetary Fund both highlighted the risk to house prices if there was a Brexit, but previously both of these have raised as a key concern for the UK economy the rising house prices in the UK ?
For the local property market the impact if any is likely to be minimal with the most likely outcome to effect property owners being a rise in interest rates. In fact as reported in a previous article, there has been some slowing of the property market recently and if you look at the numbers you can see that this started over 6 months ago well before the referendum was announced in February.
If we look at the property prices over the last 12 months in the Hemel Hempstead area we can see that they had risen by about 1.6% but more recently they had fallen by about 0.6% over the last 6 months.
If we look closer to home in the Dunstable and Houghton Regis areas we can see than over the last 12 months house prices had risen by about 7% outperforming the markets closer to London as home owners and investors priced out of the London market found affordable property in this area. Over the last 6 months the average property prices have fallen by about 0.5% in line with the property prices noted above in Hemel Hempstead. This we could put down to a number of factors such as a cooling of the property market, buyers waiting to see what happens in the referendum vote and the stamp duty changes at the beginning of April. Compare this to the 7% rise in the previous 12 months and this can probably be seen as a levelling off with the gains achieved in the last few years being held due to the continuing demand of the London buyers and renters looking for somewhere more affordable.