So, since
the Referendum are we beginning to show signs of that prophecy? The simple
answer is ‘yes and no’.
Good
barometers of the UK housing market are the share prices of the country’s biggest
building corporations. Much was made of
Barratt Homes’ share price dropping by 42.5% in the 2 weeks after Brexit, along
with Taylor Wimpey’s equally drastic drop in the same 2 weeks by 37.9%. Looking at the most recent set of data from
the Land Registry, property values in Stamford are 1.05% down month on month
(and the month before that, they had decreased by 0.25%). So, is this the time to panic and run for the
hills?
Well,
as I have spoken about many times in my blog, it is naive to look at short
term. The heady days of the property
prices ‘rising quicker than a thermometer in the desert sun’ between the years
2011 and late 2016 are long gone – and good riddance. Yet it might surprise you that during those
impressive years of house price growth, the growth wasn’t smooth and all upwards.
Stamford property values dropped by 1.39%
in April 2012 and 1.8% in December 2014 – and no one batted an eyelid then.
Property
values in Stamford are still 5.37% higher than a year ago, meaning the average
value of a Stamford property today is £313,700. Even the shares of the aforementioned building
corporations have increased since early July; with Barratt Homes by 43.3% and Taylor
Wimpey by 37.3%. The Office for Budget Responsibility (the government spending
watchdog), recently reduced its forecast for house-price growth in the coming
years - but only slightly.
The Stamford
housing market remains steadfast. Partly
because the wider economy has performed better than expected since Brexit.
There is a robust link between the unemployment rate and property prices, and a
flimsier one with wage growth. Unemployment in the South Kesteven District
Council area stands at 2,500 people (3.6%), which is considerably better than a
few years ago in 2012, when there were 4,500 people (6.4%) unemployed in the
same area.
However,
inflation is the only thing that does worry me. Looking at all the pundits, it
will get to at least 3% (if not more) in the latter part of 2017, as the drop
in Pound Sterling in late 2016 renders our imports with higher prices. If that transpires then the Bank of England,
whose target for inflation is 2%, may raise interest rates from 0.25% to 2%+. However, that won’t be so much of an issue as
81.6% of new mortgages in the UK in the last 2 years have been fixed-rate - and
who amongst us can remember 1992 with interest rates of 15%?
Forget
the two thorns in our side of ‘Brexit’ and ‘Inflation’, the greatest risk to the
whole property market is that there are simply not enough properties being
built, thus keeping house prices artificially high.
Good
news for those with a foot on the property ladder, but not for those first-time
buyers who aren’t!
David Crooke
david@upp-property.co.uk
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