Even the most sane 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 are saying prices will be affected by around 10%. So looking at the commentators thoughts in more detail, property values in Northampton 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 Northampton Borough
Council area is £181,100, this means property values are set to drop for the
average Northampton property by £18,110… 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 in Northampton, the
devil is always in the detail
Look at the phrase again, and I have highlighted the
relevant part “Property values in Northampton 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 9.14%
higher than a year ago in the Northampton Borough Council area. The 12 months
before that they rose by 6.81% and the 12 months before that, they rose by 7.99%.
If we hadn’t voted to leave I believe, based on these figures, we could have
safely assumed Northampton House prices would have been 9% higher by the summer
of 2017.
… and that’s the point, we won’t see a house price crash in Northampton,
it’s just that house prices in a years time will be 1% lower than they are now
(i.e. 9% 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 Northampton Borough
Council area and Northampton as a whole.
Average Value of a property 20 years ago £ 42,300
Average Value of a property 10 years ago £ 144,800
Average Value of a property 2 years ago £ 155,400
Average Value of a property 1 year ago £ 166,000
Average Value of a property today £ 181,100
Projected Value of a property in 12 months’ time £ 179,300
Therefore, I believe the average value of a Northampton property
will be £1,800 lower in 12 months’ time than today.
That’s not to say Northampton property prices might not dip
slightly on 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)... but in 12
months time this is my considered opinion of where Northampton 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 Northampton house
prices have always bounced back.
Whilst the UK's vote for Brexit has created an uncertainty
in the Northampton 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.
… and Northampton landlords? They have recently been thrashed
by Osborne’s tax changes, but yields could rise if Northampton 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 Northampton landlords add to their
portfolio, as rental demand for Northampton property is expected to stay strong
as more people find it more and more difficult to obtain mortgages.
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