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

 

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

What will your Estate Agent actually do?

There are now a number of different companies, with a range of business models, each claiming to be able to successfully sell your home. As such, and often contrary to perception, there can be a wide variance of marketing and service levels offered to customers.

With this in mind, I felt it might be useful to summarise what Jackson Grundy offer their customers so they may make an informed comparison with other companies.

Therefore, below is a (not necessarily exhaustive) list of what you can expect from us…

We will:

  • Arrange a convenient time to meet you at your property in order to provide a market valuation (in writing) by an experienced member of staff, almost always the Branch Manager. This will include advice on the best asking price, based on research of local comparable properties and experience, which will strike the right balance between achieving the highest price whilst at the same time successfully securing a buyer within a good time-scale. 
  • Discuss marketing strategy and service standards with you. In addition we will offer advice on how best to present your property to the market and identify key positive features to highlight. We will also confirm our fee and answer any other questions you might have regarding what we do or the process itself.
  • Prepare attractive and informative property particulars including an appealing property description.
  • Photograph the property to include front, internal and garden photographs.
  • Measure your property and draw up a floor-plan which is then professionally produced using floor-plan software.
  • Instruct/arrange your Energy Performance Certificate (if required).
  • Compose and pay for advertising in the local newspapers.
  • Add your property to our website and mobile site.
  • Pay for your property to be listed on major property portals including Rightmove, Zoopla and PrimeLocation, as well as popular websites such as The Times, Telegraph, Independent, Mail Online, London Evening Standard and Northampton Chronicle & Echo.
  • Invest in multi-channel marketing increasing exposure of our brand and website, therefore reaching a much wider audience for your property. This includes online advertising, newspapers, local magazines, social media, blog, and outdoor advertising .
  • Make your property details available across all of our branches (via our computer network) in order to maximise its exposure to the market, whilst being allocated an ongoing main point of contact at your local branch.
  • Distribute your property particulars via post and email to our extensive database of prospective purchasers.
  • Erect (if required) a distinctive oval ‘For Sale’ board outside your property.
  • Handle resulting enquiries, vetting their suitability to your property and encourage the arrangement of viewing appointments.
  • Arrange viewing appointments, liaising with both potential buyers and sellers to confirm mutually convenient times.
  • Provide staff to professionally conduct viewings of your property, highlighting positive aspects and answering questions posed by potential buyers.
  • Follow up viewings in order to assess interest and/or obtain constructive feedback.
  • Handle the negotiation of offers on the property in order to reach the desired sale price.
  • Vet the buyer’s ability to proceed with a purchase, including understanding their financial position and checking chain details.
  • Send out Notification of Sales letters to all parties.
  • Monitor the progression of the sale, by liaising with vendor, purchaser, both sets of solicitors, other estate agents in the chain, mortgage brokers and surveyors.
  • Confirm completion of the sale with solicitors, checking monies have been received and arrange key hand-over.

What your agent says image

I believe we are able to provide all the above components for a fee which is highly competitive. It is of course up to home-sellers to decide what balance of service/marketing and fee they require, however we are confident that Jackson Grundy offer great value for money.

If you would like to arrange a free initial consultation, or indeed have any questions regarding the above, please feel free to contact me on 01604 753044.

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