Even the most sane person in Britain has to admit the Brexit vote will, for better or worse, affect the UK Property market. Excluding central London, which is another world, most commentators broadly agree prices will be adversely affected by around 10%. Looking at commentators’ thoughts in more detail, Colchester property values will be 10% lower than they would have been if we hadn’t voted to leave the EU.
The current average value of a property in the Colchester Borough Council area is £228,400 which means property values look set to drop, for an average Colchester property, by £22,840. Batten down the hatches! Soup kitchens and mega recession here we come, it’s going to get rough!
But, before we all go into panic mode, the devil, as always, is in the detail. Look at the phrase again, and I have highlighted the relevant part, “Property values in Colchester will be 10% lower than they would have been if we hadn’t voted to leave the EU”
Property values today, according to the Land Registry, are 8.25% higher than a year ago in the Colchester Borough Council area. The 12 months before that they rose by 10.69% and the 12 months before that, they rose by 7.55%. Taking those figures, if we hadn’t voted to leave, I believe we could have safely assumed Colchester house prices would have been around 9% higher by the Summer of 2017.
So that’s my point – we won’t see a house price crash in Colchester – it’s just that house prices in a years time will be 1% lower than they are now (i.e. 9% less the 10% lower figure because of Brexit). Look at the historic figures and the graph at the top of this page to see how that compares to today’s figures for the Colchester Borough Council area and Colchester as a whole.
- Average value of a Colchester property 20 years ago: £53,900
- Average value of a Colchester property 10 years ago £179,200
- Average Colchester property value 2 years ago: £190,600
- Average value of a Colchester property 1 year ago: £211,000
- Average value of a Colchester property today: £228,400
- Projected value of a property in Colchester in 12 months’ time: £226,100
Therefore, I believe, the average value of a Colchester property will be £2,300 lower in 12 months’ time than today.
That’s not to say Colchester property prices might not dip slightly in the run up to Christmas (in fact they always have done just about every year since the year 2000 and most of those were boom years) but in 12 months time it’s my considered opinion where Colchester property values will be. Looking at historic prices, even if I (along with many other property market commentators) have got it wrong and prices drop 10% from TODAY’S figure, in the overall scheme of things, we have already experienced a Credit Crunch, Black Monday and 15% interest rates over recent decades and Colchester house prices have always bounced back.
Whilst the UK’s vote for Brexit has created uncertainty in the Colchester housing market, there’s no need to panic and prospective buyers should exercise common sense in their purchases. I always urge people to be prudent and, if you are taking out a mortgage, understand that at some stage during the life of that mortgage, circumstances are likely to be difficult. There won’t be a 2008 credit crunch fire sale of properties because, after the mortgage market review which took place during Spring 2013, mortgage borrowers are not as highly leveraged this time around. As a result, with any luck, there won’t be too many distressed sales, which could cause widespread price reductions.
For Colchester landlords, that have already been hit by Osborne’s recent tax changes, yields could rise if Colchester house prices fall/stablise and rents grow. This may also make it a little easier to obtain mortgages because the rental income would cover more of the interest cost. If prices were to level, or come down, that could help Colchester landlords add to their portfolio, as rental demand for Colchester property is expected to stay strong as more people find it harder to obtain mortgages.
If you’d like an informal chat about any aspect of investment in the Colchester property market please give me a ring on 01206 862288 or email firstname.lastname@example.org – I’m always happy to offer a without obligation second opinion.
Send me a link to any property on Rightmove or Zoopla you are interested in and I will get back to you, usually within 24 hours. I am also happy to undertake free pre-purchase visits to your shortlist of potential properties to provide a rental valuation.