What would Brexit mean to the Chichester Property Market?

I don’t know about you, but I find that if you read the Daily Mail there are normally two topics that make the blood boil of ‘Middle England’. Bureaucracy from Brussels and House Prices. If we as a country are to unshackle ourselves from the chains of Brussels, could we inadvertently effect the second topic and make UK house values drop?  

If you read 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 Chichester, not Marylebone, Mayfair or any part of Zone 1 London.

Now on the run up to the vote on the 23^rd of June, I predict that the ‘in’ camp will start to scare homeowners with forecasts of negative equity and the ‘out’ camp will appeal to the 20-somethings, who have been priced out of the property market, with the prospect of a new era of inexpensive housing. There are also fears from central London estate agents and developers who believe the bottom will fall out of the market if we were to leave.  In my opinion, 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 his is threatened by Brexit.

…But again, we are in Chichester and central London is 72 miles away! We are the famous Cathedral City, home of the Festival Theatre and birthplace of astronaut Timothy Peake! Whilst the central London property market exploded after 2009, this explosion really and honestly didn’t affect the Chichester property market. So, putting central London aside, what would an ‘in’ and ‘out’ vote really mean to the 15,550 home owners of Chichester?

Initially, over the coming months approaching the 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 Chichester increased by 0.76%, not bad for a country that thought it would get a hung parliament! So that argument doesn’t hold much weight for 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 Chichester property market return to a status quo very quickly, but the contrasting result could lead to some changes. The principal menace to the Chichester (and UK) housing market could be variation (in an upward 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 again two thirds of landlords buy without a mortgage, so that won’t affect them so much. 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 that’s 56% that don’t! So, if you aren’t on a fixed rate, talk to your mortgage broker, 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 Chichester, but a City Whiz-Kid in London earning millions! However, I suspect that whatever decision the electorate of Chichester and the country as a whole make, over the long term it won’t have a major effect on the local 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 1975 oil crisis that stimulated another property crash. We can even go back nearly a century with the 1926 post General Strike slump in property prices!

Today, property prices are 274.85% higher than 20 years ago in Chichester and are 15% higher than 5 years ago. So, make your own decision on 23^rd of June 2016 safe in the knowledge that whatever the result, there might be some short term volatility in the Chichester property market. In the long term (and property investment is a long term strategy) there aren’t enough houses in Chichester to live in either to buy or rent, and until the Government allow more properties to be built, the Chichester property market will be just fine! Even if it has a little blip in the summer, there could be some property bargains to be had on the run up to Christmas.