HOW WOULD A HARD BREXIT AFFECT GRAVESEND PROPERTY PRICES?

Posted by admin 19/10/2018 0 Comment(s)

I have been asked a number of times recently what a hard Brexit would mean to the Gravesend property market. To be frank, I have been holding off giving my thoughts, as I did not want to add fuel to the stories being banded around in the national press. However, it’s obviously a topic that you as Gravesend buy to let landlords and Gravesend homeowners are interested in ... so I am going to try and give you what I consider a fair and unbiased piece on what would happen if a hard Brexit takes place in March 2019.


After the weather and football, the British obsession on the UK property market is without comparison to any other country in the world. I swear The Daily Mail has the state of the country’s property market on its standard weekly rotation of front-page stories! Like I have said before on my blog, there are better economic indexes and statistics to judge the economy (and more importantly) the property market. If you recall, I said the number of transactions was just as important, if not more, as a bellwether of the state of the property market.


Worries that the Brexit referendum would lead to a fast crash in Gravesend (and national) property values were unfounded, although the growth of property values in Gravesend has reduced since the referendum in the summer of 2016.


Now, it’s true the Gravesend property market is seeing less people sell and move and the property values are rising at a slower rate in 2018 compared to the heady days of the first half of this decade (2010 to 2015), but before we all start panicking, let’s ask ourselves, what exactly has happened in the last couple of years since the Brexit vote?
 

Gravesham and Gravesend house prices have risen by 7.93%

since the EU Referendum...


...and yes, in 2018 we are on track (and again this is projected) to finish on 1,416 property transactions (i.e. the number of people selling their home) ... which is less than 2017 ... but still higher than the long term 12 year average of 1,326 transactions in the local council area.
 

So, it appears the EU vote hasn’t caused many major issues so far, however, if there was a large economic jolt, that could be a different game, yet how likely is that?
 

The property market is mostly influenced by interest rates and salaries.


A hard Brexit would subdue wage growth to some degree, yet the level of the change will depend on the undetermined type of Brexit deal (or no deal). If trade barriers are imposed on a hard Brexit, imports will become more expensive, inflation will rise and growth will fall, although at least we are not in the Euro, meaning this could be tempered by the exchange rate of the Pound against the Euro. In plain language, a hard Brexit will be worse for house prices than a deal.

 

So why did the Governor of the Bank of England suggest a disorderly hard Brexit would affect house prices by up to 35%?
 

I mean it was only nine years ago we went through the global financial crisis with the credit crunch. Nationally, in most locations including Gravesend, property values dropped in value by 16% to 19% over an 18-month period. Look at the graph and if we had a similar percentage drop, it would only take us back to the property value levels we were achieving in 2015.

** blog provided by Gravesend Property Blog