Even the most sane person in Britain has to admit the Brexit vote will, in one shape or another, affect the UK Property market. Excluding central London which is another world, most commentators are saying prices will be affected by around 5%. So looking at the commentators’ thoughts in more detail, property values in Lancaster will be 5% lower than they would have been if we hadn’t voted to leave the EU.
As the average value of a property in the Lancaster City Council area is £142,500, this means property values are expected to drop for the average Lancaster property by £7,150. Should we all batten down the hatches? Will there be a mega recession? Is it really going to get rough? Before we all go into panic mode in Lancaster , the devil is always in the detail……
Will Lancaster Property Prices drop £7,100 in the next 12 months?
Look at the phrase again, and I have highlighted the relevant part “Property values in Lancaster will be 5% lower than they would have been if we hadn’t voted to leave the EU”
Property values today, according to the Land Registry are 2.66% higher than a year ago in the Lancaster City Council area. The 12 months before that they rose by 2.23% and the 12 months before that, they rose by 3.57%. If we hadn’t voted to leave, I believe on these figures, we could have safely assumed Lancaster House prices would have been 3% higher by the Summer of 2017.
… and that’s the point, we won’t see a house price crash in Lancaster, it’s just that house prices in a years time will be 2% lower than they are now (ie 3% less the 5% lower figure because of Brexit). Let’s look at the historic figures and how that compares to today’s figures for the Lancaster City Council area and Lancaster as a whole.
Average Value of a property 20 years ago £43,700
Average Value of a property 10 years ago £134,700
Average Value of a property 2 years ago £135,800
Average Value of a property 1 year ago £138,800
Average Value of a property today £142,500
Projected Value of a property in 12 months’ time £139,700
Therefore, I believe the average value of a Lancaster property will only be £2,800 lower in 12 months’ time than today.
In 12 months time this is my considered opinion of where Lancaster property values will be. Looking at the historic prices, even if I (and many other property market commentators) are wrong and they drop 10% from TODAY’S figure, in the whole scheme of things, we have been through a Credit Crunch, Black Monday and 15% interest rates over the last 20 to 30 years .. and still Lancaster house prices have always bounced back.
Whilst the UK’s vote for Brexit has created an uncertainty in the UK housing market, there is no need to panic and prospective buyers should merely use common sense about their purchases. I always say to people to be prudent and if you are taking out a mortgage, at some stage during the life of that mortgage, circumstances will be difficult. We won’t have a 2008 Credit crunch fire sale of properties because after the Mortgage Market Review which took place in the Spring of 2013, mortgage borrowers are not as highly leveraged this time around. As a result of this, with any luck there will not be too many distressed sales, which cause widespread price reductions.
And what for Lancaster landlords? They have recently been thrashed by Osborne’s tax changes, but yields could rise if Lancaster house prices fall/stablise and rents grow, and this might also make it easier to obtain mortgages, as the income would cover more of the interest cost. If prices were to level or come down that could help Lancaster landlords add to their portfolio, as rental demand for Lancaster property is expected to stay strong as more people find it more and more difficult to obtain mortgages.
For more thoughts on the Lancaster Property market visit our blog at www.lancasterpropertyblog.co.uk or call in and see me at my JDG Office in Lancaster.
Thanks for reading
John