Are we seeing a post Brexit rebound?
The latest national Residential House Price index has been published today (17th October 2016) by RightMove and mostly it seems to be good news.
For the last two months average residential property prices have shown a slight increase which is the first signs that the market may be adjusting back to growth since the vote to leave Europe earlier this year.
An important indicator of consumer confidence in the economy, house prices are widely regarded as a reliable barometer of economic growth.
The South East, and Greater London in particular, is watched eagerly as a loss in confidence in the economy is often first felt in this region of the country.
Earlier this year we saw negative growth in the London property market for the first time in years. It was simply too much of a coincidence that this came at the same time as the country voted to leave Europe. The slump in the value of the pound may, in other circumstances, have been expected to stimulate foreign investment in property in the capital but this time around the foreign investors seemed to be shying away from the capital. Perhaps due to uncertainty about what a post Brexit Britain would be like.
In the last month alone London property prices have increase month on month by 2.4% which is largely responsible for the rolling annual average increase in property value of 2.5%. The average price of a residential property in London is now £645,833 compared to £630,050 in October 2015.
This is still a long way short of the double digit growth that the capital has been enjoying in recent years but it is perhaps an early indicator that some confidence is returning.
Of course we would not want to focus on the South East alone as we know full well that even when London is booming the regions can often be left lagging behind.
When we look at the picture for the whole of the UK though we can see month on month growth in average residential property prices ranging from -1.8 to 1.0 with the majority of the regions increasing slightly.
Biggest Growth Areas Outside London
The region with both the biggest month to month (1.0%) increase and the largest annual increase (7.6%) was the East of England. Average house prices in this region now sit at £340,634. It could easily be argued that this is due to a diffused influence of the London market and certainly when you compare the average house values between the two regions you can certainly see the appeal of living in the East of England and commuting into the capital when needed for work!
Average house prices in the South West unfortunately decreased by 0.8% between September and October 2016. However, over the whole of the last twelve months’ average residential prices in the South West have increased by 4.1% making the average house worth £298,087 in October 2016 compared with just £286,270 a year ago.
Therefore, despite the rurality of the South West the year on year growth in house prices is still well above inflation and certainly a lot better than the bank of England base rate which is what all banks base their interest rates in savings on.
So what is in store over the next few months and years?
It really is anyone’s guess and it will largely depend on what deal the PM can strike with Europe immediately before and after the triggering of Article 50. There is no doubt there is more uncertainty to come and this will most probably affect the property market. With the calls for a “Hard Brexit” getting louder and louder hopefully we will start to see what is in store for us soon.
Unfortunately, our Crystal Ball isn’t that accurate and we will simply need to wait and see what the short term future holds in store for us.
In the meantime, the South West is still a fabulous place to live and work. It offers so much more than almost any other region of UK as well as a milder climate.
As the majority of people relocate to this part of the world for lifestyle reasons we should continue to enjoy a buoyant property market with lots of interest from both within the region and out with the region. There will always be a need for people to buy and sell property in the South West and over the long term property values will continue to grow making these investments pay dividends over the years.
Very few people invest in property for the short term, in order to fully benefit from the investments, they need to be viewed over years not months. When you look at the South West property market over this time frame then the picture is a lot more stable with steady even growth.
The South West really does have a huge amount to offer if you are looking for more than simply a commuter home. In the South West we all enjoy fabulous countryside, great food, vibrant culture, a sense of community and lower crime rates than most other parts of the country.
So what are you waiting for, if you have always dreamt of moving to the West Country give us a call and let us help make your dream come true.
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