Thursday, 20 October 2016

Chichester house prices to drop £65,160 because of Brexit?

A lot has happened to the political hierarchy in the four months since the shock result to leave the EU. Meanwhile, the pre-referendum predictions if we voted out have largely been unfounded. An initial plunge in the stock market has since reversed to all-time highs whilst interest rates, which were predicted to rise, have dropped to all-time lows!

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?!).

George Osborne warned of house price falls of 18% if we voted to leave. With an average house price of £361,999 in Chichester, that would mean a drop in value of £65,160 per property!

In the month after the referendum result, house prices actually increased 0.4% across the UK to stand 8.3% higher than a year ago. No obvious signs of panic there then. Chichester fared even better with a rise of 2.7% in July (+7.2% in the year).

You could argue that with the pound dropping 16% against the dollar, our homes are indeed now worth that much less than before the referendum. But, since we get paid in pounds and pay our mortgages and rents in pounds, this has little immediate impact on our finances.

What is more telling is that there was a 5.5% drop in the number of properties for sale in Chichester between March and June compared to the year before, as the uncertainty in the lead-up to the referendum made homeowners wait to see what happened.

Immediately after the result to leave however, the number of properties on the market shot up; in fact there was a 13.3% increase between July and October compared to a year ago.

Chichester properties for sale graph

So, are people rushing to the exits before the predicted house price falls? Or is this just pent up demand from those fed up of waiting for events that are out of their control?

Whilst the unexpected referendum result has created some uncertainty in the housing market, I’d say there is no need to panic. Common sense should prevail as people realise that property is a long-term pursuit; bear in mind that prices have risen nearly 2,000% in Chichester since the previous EU referendum in 1975! Having survived the credit crunch, Black Monday and 15% interest rates during that time, I think Chichester’s house prices will fare just fine as we navigate through Brexit.

Chichester Observer Property headline

(This article was featured in the Chichester Observer's property section on 20th October 2016)

Clive Janes, CRJ Lettings.


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