What would a ‘Brexit’ mean for the UK Housing Market?

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photo: Abi Begum

 

The UK Housing Market seems to have become a key battleground upon which both ‘in’ and ‘out’ camps have thrust forward their unequivocal, yet diametrically opposed arguments. So what precisely are both sides predicting and why? Can history aid us at all in reaching a confident forecast? And will such speculation influence how the public vote anyway?

Just in case you haven’t read enough conjecture about the pros and cons of a ‘Brexit’ I thought I’d chip in with some of my own. Given some might suggest Jackson Grundy have a vested interest in the result of the vote, I have consciously tried to limit personal comment (as best anyone with an opinion can) and have sought to concentrate on summarising the arguments.

A MULTI-FACETED ISSUE

The first suggestion I’d like to make is that the UK Housing Market is a many headed beast and not all heads react and move in the same direction at the same time. This particular behaviour is unlikely to change regardless of whether we remain in or leave the EU. Regional markets react differently to the London market, and demand for property is often driven by differing factors:- regional house prices, local employment and wage growth, immigration levels, and investment opportunities to name just a few.

Highlighting possibly one of the most marked contrasts, Shane Croucher (International Business Times) writes: ‘There are two sides to demand in the property market: domestic and overseas. There is a world of difference between a first-time buyer trying to get onto the property ladder in the outskirts of Leeds, and a Russian oligarch buying a £30m flat in prime central London…and a Brexit would touch them in different ways.’ The problem arises when we consider that the effects of Brexit might also touch the two examples in different ways depending on whose set of forecasts you believe to be the most likely.

THE PRE-VOTE PICTURE

In the interest of providing some context, at Jackson Grundy we have seen a 7% increase in the average house price over the last 12 months, the Office for National Statistics reports it at 9% across the UK. Halifax has stated that there has been a 1.4% increase in prices over the three months leading up to the end of May compared to the previous quarter. In short, largely undeterred demand coupled with low supply continues to stimulate house price inflation. So how might this change post Brexit?

A survey conducted earlier this year by Accountancy firm KPMG found that 66% of real estate experts believed that ‘Britain leaving the EU would have a negative impact on inbound cross-border investment’. There are a number of possible reasons why this might happen; the most obvious of which being reduced European immigration, which could also cause a reduction in property prices due to lower levels of demand.

Perhaps unsurprisingly there is a counter argument which maintains that (especially in London) investment comes from many sources outside of Europe, which if anything might increase were the British government to carry out measures to encourage this sector once free to regulate the market as it sees fit. However, critics of this argument suggest that home grown regulation may well be more stifling than the status quo.

MORE ABOUT PRICES

Controversially the Treasury have announced that average house prices could fall by between 10 and 18 percent by 2018 in the aftermath of a ‘Brexit’. This follows similar assertions by the likes of Deutsche Bank (perhaps less than impartial) and The International Monetary Fund. Conversely, the Office for Budget Responsibility are projecting a 10% increase in house prices were we to remain in the EU – however there are some who would question the credibility and accuracy of said Office.

WOULDN’T LOWER HOUSE PRICES BE A GOOD THING?

A number of high profile advocates of Brexit do not seem to dispute that prices will fall, but rather assert that lower prices would lead to greater affordability for those currently struggling to get on the property ladder. This has been a key argument used by the ‘Leave’ camp to win over younger voters. In isolation, with all other factors being equal, this point might be difficult to dispute, however all other factors are not likely to remain constant as I’ll move on to.

WHAT ABOUT INTEREST RATES?

The ‘Remain’ campaign have projected that Brexit would lead to an increase in the cost of borrowing brought about by a combination of a post-exit recession and fall in the value of Sterling. ‘Britain Stronger in Europe’ states that analysis indicates mortgage rates could rise by 70 basis points, resulting in a mortgage rate of 1.5% rising to 2.2%. They have translated this to suggest that the annual cost of the average mortgage could increase by £920. In addition to this, should mortgage lending criteria tighten in conjunction with increased interest rates, whilst first time buyers might benefit from lower house prices in principle, they may well find it more difficult to actually get a mortgage in the first place.

One of the counter arguments put forward by the ‘Leave’ campaign on this point is that remaining in the EU would tie Britain’s economy to a eurozone crisis which would be a danger to Britain. They argue that any economic fallout as a result could essentially lead to the same set of undesirable consequences that the ‘Remain’ campaign say would occur were we to leave the EU. Again, this really is a case of whose projections you believe to be more likely.

CAN HISTORY HELP US?

So is there any precedence for this situation? The short answer is no, not exactly. The UK has, however, clearly experienced credit crunches and housing market declines before, which can arguably offer some parallels without being precisely the same. The 2008 financial crisis, and drop in the value of Sterling, led to an increase in the cost of borrowing, greater barriers of access to lending and consequentially significant house price decline.

Increases in interest rates during the 1990s were also largely responsible for the resulting housing market crash.

These hypotheses, however, assume that leaving the EU will cause a recession and/or increased interest rates in the first place, so their relevance depends on how you feel about that supposition.

HOW HIGH A PRIORITY IS THE HOUSING MARKET TO YOU ANYWAY?

As you might expect, the performance of the Housing Market is of acute interest to Jackson Grundy as a business, and if you’re reading this I assume it’s of some interest to you also. However its fate, post-referendum, may well not be a key consideration in forming your opinion on which way to vote. Still, hopefully you will feel you have an overview of both sides of the debate on this subject, even if it doesn’t help you reach a definitive conclusion in itself.

Happy Voting!

 

Nick Rees

Group Marketing Director

Jackson Grundy Ltd

 

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What makes a home?

Happy New Home

A house, bungalow or apartment is essentially a pile of bricks, mortar and roof tile. So what makes a home, other than it’s where you happen to live? Here’s our list of the top ten things we think contribute to turning that pile of bricks in to your treasured home…

Your ‘nearest and dearest’Let’s get the slightly cheesy bit out of the way first. This is of course what lies at the heart of the home…the people you share it with. Coming home to them and sharing experiences, hopefully positive, sometimes negative, but always together.

The ‘key and coin drop’I think it’s fair to assume we all have one of these…admittedly some are better organised than others. A temporary (or perhaps more permanent) home for your keys, coins, post, phone, hair bands, reading glasses and so on! The real trick here is to keep the area from expanding and conquering other parts of the room or home!

The aroma of home cooked foodWe realise this may be something of a cliché, or the appeal of such can be strongly linked to the culinary prowess (or otherwise) of the residents, however it is undoubtedly one of the things that contributes to making a house feel like a home. After all, where else can you authentically experience the smell of home cooked food?

‘Breaking bread’ together – Dinner time; it’s when we sit down, discuss the day’s events, put the world to rights…on occasion argue, or ignore each other, but it’s special because in these busy times it can often be the only time the household are all in the same place at the same time.

Your ‘safe place’ and shelter – It’s where you can shut the door and immediately feel more relaxed, comfortable and safe. The satisfying contentment of getting through the door on a dark, wet, wintry night; or putting your feet up after a particularly hard day at work. It’s yours and your family’s domain, no-one else’s…and that is a wonderful thing.

Making a house your ownSome choose to redecorate from top to bottom, add extentions and completely remodel the property to suit their and their loved ones’ needs. Others might painstakingly hand-pick items of furniture, art or souvenirs from travels abroad. All these things can help make a house feel like a home, but more importantly they can reflect your personality, express your creativity…or to really overstate it, your home can be a showroom to your soul! (sorry about that!)

Connections to the pastWhere you live is also where you keep those family heirlooms, your photographs and home videos; it’s where you collect and catalogue your family memories, links to ancestors and where you can surround yourself with items that signify where you and your family come from and how you have developed over the years.

‘Lounge pant’ luxuryYour home is also where you can wear clothes you wouldn’t be seen dead in outside the house – tatty dressing gowns, PJs, onesies and those much loved lounge pants and fluffy slippers. Basically it’s where you can slob out without anyone truly judging you.

The sound and chaos of lifeA home is not only about relaxation of course. It is often where the chaos happens! The toy drum kit that someone who doesn’t like you very much bought for your child, the flat screen telly that’s always on too loud, kids attempting to throttle each other, dogs barking, cats meowing, the drilling of the next DIY disaster, the mowing of the lawn, the chatter, and the laughter which comes with watching the latest celebrity having to eat bugs or the debate over whose showstopper is the most impressive. The noise of family life…it’s yours and it’s locked in to your home.

Family habitsThe traditions you create for yourselves. These can be as common as the Sunday Roast, or takeaway/movie night, reading your children a bedtime story – things that other people do but they are individually special to you in your home, they are often mundane but all contribute to your sense of homeliness.

So you may not agree with all our picks, some you may not relate to, or you may think we left some big ones out…but hopefully you will agree with some of the above.

It all goes to illustrate that it is us whom make the house a home. The building is a building, it’s what we do in it and what we fill it with that elevates it from bricks and mortar to something much more valuable.

Kind regards

Nick Rees

SOCIAL MEDIA – the ‘friend’ of house buyers and sellers everywhere

The impact and usefulness of Social Media within the Property Industry would still seem to be a topic up for debate in 2014. From the perspective of Estate Agents, at least in some part, I suspect this is due to the unavailability of a reliable gauge of its effectiveness in increasing the turnover of its business. This is, of course, irrelevant to the benefits it provides house buyers and sellers, which I believe can no longer be disputed.

Facebook pages, Twitter feeds and Property blogare all examples of valuable resources that can be tapped, for free, by those interested in property.

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Facebook Page example

We know that the Social Media landscape can be a challenging environment for any business, possibly none more so than Estate Agents (well, except perhaps Bankers!). Any company prepared to engage with the public on an open platform, for all to see, must be confident in its service and brand reputation, which in itself is useful information for any potential customer.

Many statistics evidence the digital medium as significantly more important than newspapers as a house buying and selling tool. Social Media should simply be seen as an addition to the major property portals such as Zoopla and Rightmove. In a lot of ways, however, it is more effective in helping ascertain the character and points of difference between local Estate Agents. After all, whose customer service are you more likely to trust, an Agent who offers free and useful content, who is accountable and willing to answer questions via an open platform, or an Agent who is afraid to engage with the public via Social Media?

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Twitter Feed example

For a company to maintain a strong online presence it must be effective at marketing, communication and customer service, all qualities which I am sure most customers will look for in their Estate Agent.

The social network feeds of Estate Agents often feature free property advice, tips and inspiration. This information is available to everyone, whether they become a customer or not. It is, therefore, a no-lose situation for anybody likely to move, now or in the future, to ‘follow/like’ these Agents.

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Property Blog example

Some companies also provide a property search ‘app’ on their Facebook page. This allows users to search for property without having to leave Facebook. As most users log-in daily, this should be a convenient feature for home hunters. Other little bonuses for following some companies on Social Media include the many giveaways and competitions run in order to increase engagement in their pages.

Finally, the immediacy of Social Media (as opposed to Print Media) means that the news, advice, tips, and even the entertainment content shared by Estate Agents is bang up to date, providing an advantage of information to those customers who choose to follow.

With all this in mind, I recommend that house buyers and sellers everywhere start to look at the social network pages of Estate Agents as a valuable aid in the house moving process. (As an Estate Agent ranked in the Zoopla Property Power 100 list, it may not surprise readers to learn that I would politely suggest starting with Jackson Grundy!)

Kind regards

Nick Rees

Group Marketing Manager

The Diary of a Refurbishment – Week 1

I thought it might be interesting, and possibly helpful, for me to document the progress of the refurbishment of a local property.

I’m very grateful to a local property developer for allowing me access to his project at various stages of completion. I hope it will provide an insight in to what the various stages look like, and what can indeed be achieved on a project such as this. Apart from that, I just think it is intriguing to see how the property will change over the course of the refurbishment. I am not presenting it as a ‘how to’ guide, as I personally do not have the building knowledge to do so, and any practical advice you might take from my posts are entirely up to you…for which neither myself or our developer friend take responsibility! 🙂

The property is situated on Main Road in Duston. So let me start by showing you images of the house taken during Week 1 of the project:

Front

184 Main Road front

Living Room

lounge

Dining Room

dining

Kitchen

184 Main Road kitchen

Bedroom 1

bed1

Bedroom 2

bed2

Bedroom 3

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Bathroom

184 Main Road bathroom

Rear Garden

184 Main Road garden

and finally, so you can get a feel of the layout, here is the….

Floorplan

184 Main Road FP

I will be in touch again shortly to update you with the next set of images. Until then, thanks for reading.

Kind regards

Nick Rees

Presenting your home for sale

We’ve decided to share our experience of what works and what doesn’t work when presenting your home for sale.

The first step is to try to detach yourself emotionally from the property and think objectively. Easier said than done, I know, but if you can manage it it will help you make rational decisions throughout the whole selling process.

KERB APPEAL

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Smarten the front facade of your property and the gardens as much as possible. That first impression is crucial, both in marketing photographs and when people approach the property for viewings.

THE HALLWAY

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In the same way as the kerb appeal is important, so is your hallway. A bright and smart looking hallway should immediately create a positive reaction in viewers of your home.

DE-CLUTTER

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It’s not necessary to go all out ‘minimalist’, however rooms tend to have more impact with fewer, carefully chosen items in them, and they will generally look and feel more spacious and relaxing.

LET THERE BE LIGHT

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A sense of light is extremely appealing to most potential buyers. Allow as much natural light as possible into the property. In rooms with little natural light, a couple of carefully chosen lamps can do wonders.

ADD SOME SPARKLE

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Almost goes without saying, but try to keep the property as clean and tidy as possible. Make sure the lawn has been mowed and the borders weeded. A little extra effort here can make all the difference.

THE SWEET SMELL OF SUCCESS

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Smokers and pet owners should make a concerted effort to deodorize/freshen their homes. Non-smokers and non pet owners are more acutely aware of these things and the smell of ‘Pine Glades’, fresh flowers or yes….fresh coffee are much more appealing.

MAKE YOURSELF SCARCE

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I realise that this is not always possible, however effort should be made to vacate your home during estate agent accompanied viewings. Potential buyers tend to feel more comfortable and are likely to be more honest with feedback if you’re not there looking over their shoulder. Also, the fewer number of people in the property, the larger it will feel.

If you follow these tips you will certainly be giving yourselves a much improved chance of achieving a sale, and possibly at a better price.

 

GOOD LUCK!

Nick Rees

Group Marketing Director

Jackson Grundy Limited