Following the recent turn of events in the House of Commons, I’ve spoken with a number of home owners and landlords within the last week and had some delightful conversations about their expectations of how Brexit will affect the value of their property.
Since the 2008/09 crash, the last 10 years has seen so much change from increasing lettings legislation, advancements in Prop Tech (Technology Agents use to market properties and improve service), government intervention affecting the buy to let sector to name a few.
You may remember dear reader, that back in April of last year, I wrote an article questioning whether York was on the verge of the next property crash. Effectively, this article pointed out that the main determinants of property prices are supply and demand, sentiment in the market and availability of finance.
I’ve thought about looking at each topic in isolation but if you regularly read my articles, I will skirt over the supply and demand point as I don’t want any rolling eyes, given the number of times I’ve harped on about my thoughts on the shortage of housing stock in the market!
Moving on, while any Agent will tell you that there are less properties on the market for sale today than there have been previously, market sentiment is seemingly still strong when we look at the average number of monthly property transactions over the last ten years in York (refer to below table).
Following the crash in 2008, this number seemingly remains constant over the years and would appear to be unaffected prior to or following the referendum, 23rd June 2016 or the following years thereafter (save for 2018 where there has been a drop in monthly transactions by 9.46%).
In light of the above, does Brexit spell the end of the rise in property prices in York? Well you may be surprised to find out that from Land Registry data this is not the case. The average price for a property in York a year before the Referendum, (June 2015) stood at £217,000. A year on and during economic uncertainty, property prices are still rising in York, albeit, seasonally.
The below graph shows that the average price of a property in York was £230,600. A year on and in June 2017, the average price grew to £249,200 and as at the end of last year, stood at £254,400.
What this tells me is that Brexit may have had more of a cooling effect on the York property market, but properties are still selling, and prices are still on the rise.
In terms of availability of finance, well following the crash in 2008, where mortgage lenders were practically throwing money at lenders, the mortgage lending market has become significantly more stringent for both home owners and landlords. The average Loan-to-Value (LTV) lending on property is now 75%, significantly lower than it was 10 years ago. Despite still historically low interest rates, borrowers can utilise a higher LTV, but given the higher rate they will have to pay for taking this level of debt on, there is less incentive to do so.
So, if you are a landlord looking for their next buy to let investment but want to see what happens with Brexit, my advice would be, focus on the long-term. If prices did drop, given the strong fundamentals that York has to offer, the market would recover and over time the price of your investment to continue to rise given the lack of supply of housing stock.
If you are looking to sell your property, then again, why wait? If you have been thinking of upsizing or moving within the catchment area of that local school you want your children to go to, then now is as good a time as any to do so. One way of looking at it is, the events leading up to the referendum, or the general election in 2017, had you ‘kicked the can down the road’ back then, then you would have seen that property prices have risen, despite you being in the same place you are now.
I personally like to take the contrarian view but in short, despite macro- or micro-economic scale, we all have our individual lives to get on with. Let’s be honest, if it isn’t Brexit, it will be something else!
If you need help buying/selling or renting your next property, let me see if I can help.