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, but 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 etc.,
in Central London ... but we are in Grantham, not Marylebone, Mayfair or any
part of Zone 1 London.
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,
and the ‘out’ camp will appeal 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 steadiness, an open and honest legal system and
a lively cultural life. None of that is threatened by Brexit.
... But again, we are in Grantham and central London is 125 miles away. We
are hometown to Margaret Thatcher, Sir Isaac Newton and manufacturers of the
first diesel engine - Richard Hornsby & Sons, and whilst the central London
property market exploded after 2009, that explosion really and honestly didn’t affect
the Grantham property market. So, putting central London aside, what would an
‘in’ or ‘out’ vote really mean for the 11,170 property owners of Grantham?
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. With the short-term
uncertainty in the country, quite often, 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 Grantham increased by 1.76%, 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 Grantham property market return to a status quo very quickly, but
the contrasting result could lead to some changes. The principal menace to the Grantham
(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
were 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
they can only go in one direction!
So in reality, if I really knew what will happen, I wouldn’t be
a property geek in Grantham, but a City Whiz Kid in London
earning millions. However, I suspect whatever decision the electorate of Grantham
and the country as a whole makes, over the long term it won’t have a major
effect on the Grantham 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 241.83% higher than 21 years ago in Grantham
and are 4.2% higher than 12 months ago. So, make your own decision on 23rd
of June 2016 safe in knowledge that whatever the result, there might be some
short term volatility in the Grantham property market, but in the long term
(and property investment is a long term strategy) there aren’t enough houses in
Grantham to live in either to buy or rent … and until the Government allow more
properties to be built – the Grantham property market, will be just fine ...
even if it has 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 Grantham property market,
even where those buy to let bargains could be found now ... visit the Grantham
Property Blog
