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 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.

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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

To sell or not to sell?

The first thing I should point out is this post expresses my personal speculations on the housing market and house prices. It is an opinion based on my 19 years in the property industry and my current understanding of the market as it is now. It is not firm financial advice, which I am not qualified to give, and as such should not be taken on its own but rather together with other opinions or research.

Right, now that’s out the way let me get on with my speculations on the housing market as it is now and later in the year.

Providing you are not being influenced in this regard by pressures outside of your control, the title question can be particularly taxing (excuse the pun) during Election year. The default state (unsurprisingly) tends to be the ‘wait and see’ technique, but is it true that ‘fortune favours the brave’ or is that just another meaningless cliche?!

One thing we know for sure right now is there is strong demand for most types of property in Northamptonshire…and inadequate levels of ‘stock’ (a reluctantly impersonal term given we are talking about people’s homes). Of course, there is usually more to consider when making a decision to sell than the principles of supply and demand. Most of those other considerations though are usually personal, family orientated practicalities rather than sober assessments of the housing market.

The problem this year with attempting to assess the post election market conditions is the difficulty with accurately trying to predict the outcome of the election in the first place. It would seem this is likely to be one of the most unpredictable of general elections with many possible outcomes not necessarily seen as possible in the past.

With this in mind it seems sensible to concentrate again on what we know with some certainty…which brings us back to straightforward supply and demand.

At Jackson Grundy we saw an average price rise of 12.7% last year, with the Office of National Statistics reporting just under 10% across the UK as a whole and 10.2 % in England. So to start with most people looking to downsize, emigrate or move into rented accommodation should be better off selling now than they were 12 months ago. Aside from this the high demand and short supply should result in a quicker sale being achieved and probably at a figure closer to asking price.

If you are a seller looking to up-size then in principle you may be worse off moving now than 12 months ago, although you may find the increase in equity favours you in terms of mortgage rates and size of deposit. If it is true that a good deal of potential movers are waiting until after the election, regardless of the financial complexities, it may be worth obtaining a property valuation now, as a surge of new property is unlikely to have an immediate effect on prices, but will have an immediate effect on the saleability of your property and the length of time it will take to sell; so in this respect it is likely to come down to a question of priorities…financial gain versus speedy move and limited disruption to your life.

As I have already mentioned, trying to predict what house prices will do post election is a tougher trick. My personal opinion is that more properties will come to the market then, but if this does happen will prices start to move downwards? The answer to this is likely to depend on how many more properties come to the market. My best guess is that the increase in stock will be enough to temporarily stem house price inflation but probably not enough, given the ongoing demand for housing, to cause a downturn in prices.

With this in mind, obtaining a valuation now is probably a good idea if you are looking to downsize, move ‘sideways’, emigrate or move in to rented accommodation. It may also be prudent if you are looking to up-size but would prefer a quicker sale process.

Ultimately though, whenever you choose to move, try to make sure you choose an agent with strong local knowledge and broad marketing.

Best of luck if you are moving this year.

Kind regards

 

Nick Rees

Diary of a refurbishment – Final Update

For those of you who have been following our Blog, you will be aware that we have been covering the progress of a local refurbishment project in Duston, Northampton.

The programme of works has now been completed and in fact the house was sold before even officially reaching the market! An endorsement of both the quality of the work carried out and Jackson Grundy’s ability to match customers to the right properties quickly! As such, we would like to think that all parties involved were very pleased with the experience and we wish the new owners happy times ahead in their new home.

Anyway, here are the final photographs. You will notice that not every room is featured as the new owners have now taken possession and were due to fit some floor coverings post completion.

Front

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Living Room

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Kitchen pic  1

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Kitchen pic 2

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Bedroom 1

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Bedroom 2

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Bathroom

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Many thanks to the local developer who allowed us access to the project and thank you to everyone who has taken an interest.

We hope to bring you a different type of project to look at in the future.

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

Short supply = Great opportunity

A year is a long time in the Housing market, and the market has experienced a significant change of characteristics over the last 12 months.

At  Jackson Grundy, we have seen a marked increase in the turnover of property through 2013. That said, we are now noticing a significant shortening of supply.

Of course, with short supply comes a great opportunity for those home sellers looking to achieve a sale before Christmas. This opportunity is likely to provide a greater chance of a quick sale, and at a better price, than might have been realised earlier in the year.

There has been a good deal of talk of a looming ‘bubble’ after the 2, 3 or 4 ‘dips’ that we are reported to have been through. As far as ‘bubbles’ and ‘dips’ go within the housing market, these rather opaque terms need not mean that much to the average home owner or buyer. Providing you make sensible, well considered financial judgements, and do not overstretch yourself, then there are no intrinsic reasons why these ‘ups and downs’ will affect your experience of home ownership in any meaningful way. At the present time, we cannot see any reason why it is not a good time to buy or sell.

It has been widely reported that prices are likely to rise next year, therefore a good reason for first time buyers and those renting property to buy now, and given these things are relative, the lack of supply would suggest it is a good time to sell at the moment. You may feel it is in our interest to present the situation in this way, and we would understand you having that opinion, however it is supported by our experiences across all 11 of our Jackson Grundy branches.

So, with all this in mind, why wait until early next year, like a lot of your competition will, before bringing your property to the market?

If you would like to arrange a FREE valuation and consultation from one of our experts, please contact me on 01604 753044 and I will put you in touch with your local office.

Best of luck and kind regards

Nick Rees

(17 years experience working in the Property Industry)

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