Thursday, 25 July 2019

Have property prices in Chichester fallen because of Brexit?

Cast your minds back to the 23rd June 2016 when Britain voted to leave the EU and the long-running saga that is ‘Brexit’ began. In the lead up to the referendum the then Chancellor, George Osborne, warned that voting to leave would see property prices drop by 18%. So, a few years on has that proven to be the case?

Whilst he didn’t set a time scale for such a fall, the simple answer is no, property prices both in the UK and in Chichester have never fallen below where they were in June 2016, according to Land Registry data. In fact, prices in the UK bounced 1.1% in the month after the vote and in Chichester by an even stronger 2.6%. Since then prices in the UK have risen by 7.8% and in Chichester by 8.7%.

But before the vote property prices were rising by about 6% a year, so perhaps Brexit has slowed down the rate of growth compared to the trajectory they were on, even if it didn’t actually cause them to fall. Of course, unlike the movie Sliding Doors we can’t play out two different outcomes in real time, so who knows what might have happened had we voted to remain.

But, is it as simple as that? You see, we may buy property and pay our mortgages using money with the Queen’s face on it but from a worldwide perspective it could be argued that property prices both in the UK and Chichester have indeed fallen, due to a weaker pound. As the Summer holidays approach this is getting mentioned more and more in the media; as we jet off to foreign lands us Brits are suddenly finding our pounds and pence don’t go as far as they used to.

So let’s focus on the US dollar, as it is the most widely traded currency in the world - what do our property prices look like then? Well, when the vote happened the average property price in Chichester was £351,758 and you could get 1.479 US dollars to the pound. That meant the average property in Chichester sold for $520,250. And now, even though prices have increased in sterling terms to £382,233, because one pound will now only buy you 1.248 dollars that means property prices have actually fallen 8.3% to $477,027. The interesting thing is they actually fell by 8.2% in dollar terms the month after the vote as sterling dropped 10.5% practically overnight; so in effect house prices have been flat for three years.

So, if we simply stay on our own island then it appears house prices are holding up just fine. But from a global perspective they have been hit reasonably hard. Is that because of Brexit? Well it’s impossible to say, but based on the fact Sterling dropped so quickly as a result of the vote it’s likely that property prices have indeed ‘fallen’ because of Brexit.

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