I don’t know about you, but I find if you read the Daily
Mail, there are only three topics that make the blood boil of ‘Middle England’.
Bureaucracy from Brussels, House Prices and the late Princess of Wales.
Ignoring the late Princess if I can for this article, but if we as a country
were to unshackle ourselves from chains of Brussels (the first topic), could we
inadvertently effect the second topic and make UK house values drop?
If you read all the newspapers, the Brexit debate seems to be
focused solely on central London. Many commentators have said Brexit would mean
central London would have a lower standing in the world, meaning less people
would be employed in Central London, with the implication of lower wages, fewer
jobs etc., in Central London ... but we are in Harlow, not Marylebone, Mayfair
or any part of Zone 1 London.
Now on the run up to the vote on the 23rd of June, I predict
the ‘in’ camp will start to scare homeowners with forecasts of negative equity,
and the ‘out’ camp will appeal the 20 somethings, who have been priced out of
the property market with the prospect of a new era of inexpensive housing,
should the fears of central London estate agents and developers, who believe
the bottom will fall out of the market if we do leave, become real. The only
reason the Mayfair’s, Knightsbridge’s, and Kensington’s of central London are
attractive to foreign buyers are political and economic steadiness, an open and
honest legal system and a lively cultural life. None of that is threatened by
Brexit.
... But again, we are in Harlow and central London is 30
miles away. We are hometown to Harlow RFC, Raytheon and Chloe Rogers, and
whilst the central London property market exploded after 2009, that explosion
really and honestly didn’t affect the Harlow property market. So, putting
central London aside, what would an ‘in’ or ‘out’ vote really mean for the 19,400
property owners of Harlow?
Initially, over the coming months, on the run up to
referendum, I believe it will be like the run up to last year’s General
Election. With the short-term uncertainty in the country, quite often, big
decisions are put on ice and people are less likely to make big money purchases
i.e. buy a property. However, in the four months up to last year’s Election,
property values in Harlow increased by 2.51%, not bad for a country that
thought it would get a hung parliament! So that argument doesn’t hold much
weight with me.
Post vote, should the UK opt to leave Brussels, there would
be a much more noteworthy impact. I believe that a vote to stay in the EU would
see the Harlow property market return to a status quo very quickly, but the contrasting
result could lead to some changes. The principal menace to the Harlow (and UK)
housing market could be variation (in an upwards direction) in interest rates
as a result of a Brexit, which could theoretically see the cost of mortgages grow
swiftly, pricing many out of the market … but then two thirds of landlords buy
without a mortgage, so that won’t affect them. Also, according to the Bank of
England, 80.33% of all new mortgages taken out in 2015 were fixed rate. Looking
at all mortgages as a whole, according to the Bank of England, 44% of all UK
mortgagees have a fixed rate mortgage, but 56% don’t, so if you aren’t on a
fixed rate ... talk to your mortgage broker now, because they can only go in
one direction!
So in reality, if I really knew what will happen, I wouldn’t
be a letting / estate agent in Harlow, but a City Whiz Kid in London earning
millions. However, I suspect whatever decision the electorate of Harlow and the
country as a whole makes, over the long term it won’t have a major effect on
the Harlow property market. We have seen off ‘the end of the world’ credit
crunch of 2008/9 and subsequent property crash, the 1988 Nigel Lawson induced
post dual-MIRAS property crash, the 1979 Winter of Discontent property crash,
the 1974 oil crisis that stimulated another property crash ... hell, we can
even go back nearly a century with the 1926 post General Strike slump in
property prices...
Today, property prices are 256.85% higher than 21 years ago
in Harlow and are 10% higher than 12 months ago. So, make your own decision on
23rd of June 2016 safe in knowledge that whatever the result, there might be
some short term volatility in the Harlow property market, but in the long term
(and property investment is a long term strategy) there aren’t enough houses in
Harlow to live in either to buy or rent … and until the Government allow more
properties to be built – the Harlow property market, will be just fine ... even
if it has a little blip in the summer, there could be some property bargains on
the run up to Christmas to be had!