I apologise in advance… another article that refers to the EU vote… but his time, its better news for Derby property owners!
Let’s face it; even the sanest person in Britain has to admit that the Brexit vote will, in one shape or another, affect UK property. We must exclude central London, however, which is another world! Most commentators are saying prices will be affected by around 5%. So looking at their thoughts in more detail, property values in Derby will be 5% lower than they would have been if we hadn’t voted to leave the EU.
As the average value of a property in the Derby City Council area is £141,200, this means property values are set to drop for the average Derby property by £7,000… batten down the hatches… stock up with soup and milk… mega recession here we come… it’s going to get rough!
Stop! Before we all go into panic mode in Derby… the devil is always in the detail…
Look at the phrase again. “Property values in Derby will be 5% lower than they would have been if we hadn’t voted to leave the EU”
Property values today, according to the Land Registry are 3% higher than a year ago in the Derby area. The 12 months before that they rose by 5.4% and the 12 months before that, they rose by 3.5%. If we hadn’t voted to leave, I believe on these figures, we could have safely assumed Derby House prices would have been 4% higher by the summer of 2017.
… and that’s the point, we won’t see a house price crash in Derby, it’s just that house prices in a years’ time will be 1% lower than they are now – 4% less the 5% lower figure because of Brexit. Let’s look at the historic figures and how that compares to today’s figures for the Derby City Council area and Derby as a whole.
£39,900 Average Value of a property 20 years ago
- £130,000 10 years ago
- £130,100 2 years ago
- £137,200 1 year ago
- £141,200 Today
- £139,800 Projected Value of a property in 12 months’ time
Therefore, I believe the average value of a Derby property will be £1,400 lower in 12 months’ time than today.
That’s not to say Derby property prices might not dip slightly more in the run up to Christmas – as they always have done just about every year since the year 2000 – but in 12 months’ time this is my considered opinion of where Derby property values will be.
Looking at the historic prices, even if I am wrong and they do drop by 5% from TODAY’S figure, in the grand 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 Derby house prices have always bounced back.
Whilst Brexit has created an uncertainty in the Derby housing market, there is no need to panic and prospective buyers should merely use common sense about their purchases. If you are taking out a mortgage, at some stage during its term, circumstances may become be difficult. We certainly won’t have a 2008 Credit crunch fire sale of properties because mortgage borrowers are not as highly leveraged this time around. As a result of this, distressed sales will be rare and widespread price reductions, even rarer!
As for Derby landlords… despite having been thrashed by tax changes, yields could rise if house prices fall/stablise and rents grow. This might also make it easier to obtain mortgages, as the income would cover more of the interest cost.
For more thoughts on the Derby Property market, visit the blog; www.derbypropertyblog.co.uk