In or out? Brexit or Bremain? The EU referendum vote approaches and Britain’s possible exit from the European Union has caused all manner of claims about how the UK property market might fare. I have already discussed this topic in a January blog post here on Medway Property News
. It could be worrying times for homeowners and landlords, especially as nobody really knows what short-term and long-term effects a Brexit could have on the Medway property market.
To get an idea of what could happen to Medway property prices, let’s look at the history of house price growth in Medway.
Starting with April 2001 we see that, according to Land Registry figures, average house prices in Medway followed a steady path, rising from £81,424 to a then-peak of £159,754 seven years later in February 2008. The economic crash caused prices to fall to a rockbottom low of £129,118 in September 2009. Not long after, prices briefly began to recover, falsely peaking at £140k in July 2010 before dropping again to 131k by the May of 2012. House prices in Medway began to really recover from May 2013 onwards and have been rising every year to a current peak of £184k, 15.7% higher than the peak in 2008.
National house price changes have followed a very similar path to Medway.
This shows how Medway has recovered from the shock and sting of the economic crash, with what has been a very long and painful recovery from the recession.
“House prices in Medway are 15.7% higher than they were at the peak in 2008 before the crash”
How else can we assess the effects of such an important vote on the UK? Before the September 2014 Scottish referendum, house price figures in Medway and the South East barely stopped to take notice, with the majority of months seeing over 1% capital growth. Growth did slow just before the May 2015 General Election, quickly recovering with 1%+ monthly rise after the Conservatives won their landslide victory. You can view and download the raw stats here
, or email me for my personalised spreadsheet with numbers crunched.
Obviously these two examples are different in nature compared to the consequences of a successful Brexit or Bremain. However, I think they are symptomatic of some key external factors affecting house prices in Medway as well as across the country. Simply put, not enough houses are being built and there is increasing demand due to an increasing population. Unless lots more properties are built soon, house prices in the UK and South East are likely to continue to rise. Only 156,140 homes were built last year in Britain, well below the government target of 200,000 new homes a year. Construction in London actually slowed down and dropped by 9% to 25,994 in 2015.
Even if we left the EU, I don’t believe that migration would significantly fall and dampen demand for housing. Britain needs migration because without it the economy would falter to a standstill. Alongside an increasing population and slow construction rates, in the long-term property prices in Medway will, in my opinion, surely only continue to go up.
On the other hand, if a Brexit is perceived as a good thing for Britain then it could actually drive foreign investment from other countries into the London and Medway property market, therefore pushing up prices even higher. It’s impossible to tell as both sides haven’t made public enough information on what a Brexit or Bremain will look like.
But ultimately it is impossible to know the consequences of a Brexit. Almost certainly there would be a short term shock to house prices, maybe a small dip which could bring those investors extremely highly geared into negative equity. It is inevitable though that prices would then continue to rise due the factors discussed today. So if you are reading this, don’t panic and make sure you’re sticking to a long-term strategy. As I’ve posted about before, such as in this blog post
, Medway is a great spot for investment.
I hope you enjoyed this article. Please email me your comments on how you see Brexit affecting the Medway property market at email@example.com. For all the latest on what’s happening to the Medway property market please subscribe to my Medway property blog.