We all have to admit that however we all voted in the referendum 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 10%. So looking at the commentators’ thoughts in more detail, property values in Boston will be 10% lower than they would have been if we hadn’t voted to leave the EU.
As the average value of a property in the Boston Borough Council area is £142,600, this means property values are set to drop for the average Boston property by £14,260.
But before we all go into panic mode in Boston – the devil is always in the detail.
Look at the phrase again, and I have highlighted the relevant part “Property values in Boston 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 9.09% higher than a year ago in the Boston Borough Council area. The 12 months before that they rose by 4.23% and the 12 months before that, they rose by 13.32%. If we hadn’t voted to leave, I believe on these figures, we could have safely assumed Boston House prices would have been 9% higher by the Summer of 2017.
… and that’s the point, we won’t see a house price crash in Boston, it’s just that house prices in a year’s time will be 1% lower than they are now (i.e. 9% less the 10% lower figure because of Brexit). Let’s look at the historic figures and how that compares to today’s figures for the Boston Borough Council area and Boston as a whole.
Average Value of a property 20 years ago £ 39,300
Average Value of a property 10 years ago £125,600
Average Value of a property 2 years ago £125,400
Average Value of a property 1 year ago £130,700
Average Value of a property today £142,600
Projected Value of a property in 12 months’ time £141,200
“Therefore, I believe the average value of a Boston property will be £1,400 lower in 12 months’ time than today.”
That’s not to say Boston 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). In 12 months time this is my considered opinion of where Boston property values will be and looking at the historic prices, even if I am 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 Boston house prices have always bounced back.
What’s the possible outcome for our Boston landlords? They have recently been thrashed by Osborne’s tax changes, but yields could rise if Boston house prices fall/estabilise 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 Boston landlords add to their portfolio, as rental demand for Boston property is expected to stay strong as more people find it more and more difficult to obtain mortgages.