What ‘Brexit’ means for Chichester’s property market

I’m writing this just a few hours after the Leave campaign took a narrow victory over the ‘Remainers’.

As more information is released, heads are spinning as the statisticians and economists try to figure out what the hell this result to leave the EU means for the country as a whole.

The first thing to remember as you listen to pundits on the tele work themselves into a sweat, is that the Channel Tunnel didn’t cave in and this is not necessarily the end of Britain’s relationship with the EU.

In terms of the property market, before the election the general consensus was that a result to leave the EU would bring house prices and rents down, making them affordable for the masses once again (have they ever been ‘affordable’ in this country?!).

The markets certainly believe that to be the case, with the stock market heavily down (although only back to levels seen in February) whilst the banks and housebuilders are taking the brunt of the falls.

I mentioned a few weeks back that an in-depth report showed 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 at this stage I’m not convinced the vote will affect house prices too greatly. Of course if George Osborne’s pre-vote predictions come true we may be headed for a drop of 18%!

This was on the basis that a ‘Brexit’ would lead to a rise in interest rates, which would increase mortgage costs and 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.

Besides, interest rates of 9%+ in the 80’s and 6%+ in the 90’s couldn’t slow down the house price boom then. Plus there's already talk that the vote to leave could actually delay any interest rate rises or indeed lead to a reduction in the record-low rate!

In the short term, the result will surely have ramifications for the property market, but you’ll need to decide whether you see it as a challenge or an opportunity. I know of some property transactions that have now been canned having utilised their ‘Brexit clause’. If house prices do drop will wannabe homeowners or investors take the opportunity to buy at lower prices, or wait for the uncertainty to pass?

Some have even suggested house prices could rise in the short-term as immigration spikes before the borders are tightened up AND in the long-term as cheap foreign labour diminishes; increasing the cost of building and refurbishing homes.

Remember that property is a long-term pursuit; prices have risen nearly 2,000% in Chichester since the last EU referendum in 1975! So, whilst the short-term could be painful for some, those in it for the long-term should be just fine.

If you’re more interested in what is happening in Chichester rather than the rhetoric about “London’s property market faces crash”, you can receive my free weekly summary of Chichester’s property market by filling in your details in the signup boxes to the right.

*********UPDATE*********

(This article was featured in the Chichester Observer's property section on 30th June 2016)

Clive Janes, CRJ Lettings.  

www.crjlettings.co.uk

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