Thursday 2 June 2016

The effect of ‘Brexit’ on Chichester’s property market

It seems everywhere you turn there’s a news story or a discussion about whether we should be ‘in’ or ‘out’ of the EU. With just a few weeks until the voting booths open, I thought it would be good to take a look at how the outcome may effect Chichester’s property market.
I’ve mentioned before how journalists, who are generally London-based, seem to focus on the impact of things in London. Whilst it may be true that a ‘Brexit’ would see demand for high-end property drop in London, as its standing in the world drops, is that likely to impact us down here on the South coast?
At the moment things seem similar to the run up to last year’s General Election; with a level of uncertainty creating a reluctance towards moving home.
This has led to there being a 7% reduction in the number of properties available to buy in Chichester compared to a year ago (297 now vs 321 last May).
It seems clear that the ‘in’ camp are scaremongering homeowners by suggesting house prices will drop if we leave the EU (George Osborne recently spoke of house price drops of 18%).
Meanwhile the ‘out’ camp are using this as ammunition towards the younger ‘generation rent’; suggesting an EU exit is an opportunity towards a new era of more affordable housing.
A slightly more in-depth report actually suggested house prices would rise 8.8% in two years if we remain in the EU….and they’d still rise 8.4% if we left the EU. So not much difference there.
As I said earlier, it’s the uncertainty that causes fear and doubts. Should we vote to stay in Europe I suspect Chichester’s housing market will return to ‘normal’ rather quickly. If, on the other hand, the country was to leave the EU, there might indeed be some changes.
Commentators say an exit would lead to an increase in interest rates (the same commentators who’ve been saying a rise is coming for years now I presume…), which would increase mortgage costs and potentially stymie house prices. Although with 40.5% of properties in Chichester being mortgage free (compared to 31% nationally), I think Chichester would weather this storm better than most.
In contrast, there could in fact be a short-term immigration surge before the borders are tightened up, which could lead to a rise in prices and rents. Longer-term the opposite may be true as net immigration eases. Might a shortage of cheaper skilled labour from abroad lead to more expensive new-build properties?
At this stage it is all pure guesswork and you’ll need to take a view on whose guesses are more credible. Whilst the EU referendum result may cause a short-term impact on the market, having fought through the ‘credit crunch’ of 2008/09 (house prices in the South-East are up 18.5% since then) and the 1989 property crash before that (we’re up 204% since then), I believe property will continue to rise in value over the long-term due to the fundamental shortage of homes. There could even be some property bargains to be had later this year!

(This article was featured in the Chichester Observer's property section on 2nd June 2016)
Clive Janes, CRJ Lettings.


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