Brexit vote changes politics, but Swindon's property market is open for business as usual
In the 20 years since Dewhurst & Co first opened its doors in Swindon, the British economy has rebounded from several downturns, notably the recession caused by the banking collapse of 2008. But despite the financial crisis and austerity measures, property prices in the Swindon area have grown more than 30% since 2008.
The political storm following Britain’s decision to leave the EU has washed away the Prime Minister, his heir apparent George Osbourne and the people’s champion Boris Johnson. However, there is no evidence that this political upheaval will have any more impact on the property market than the world’s biggest financial crash since 1929 did.
“Property prices are never easy to predict,” says Chris Dewhurst, director of Dewhurst & Co. “But even if prices were to stall or even go down slightly, that would still have no real impact on 95% of vendors and sellers in Swindon. In fact, stable or marginally lower property prices would be good news for first-time buyers who have been struggling to get on the property ladder. And that in turn has a positive effect across the whole market.”
For those further up the chain the prospect of falling prices cuts both ways. If buyers try to negotiate discounts, sellers may need to lower their asking prices. But if this happens across the market, they could reasonably expect to secure a discount from the sellers of their next home. “If you are upgrading to a more expensive property, a 2 or 3 per cent cut in its value would more than offset a similar discount on your own,” says Chris.
Another key factor for the property market in the months ahead is the availability of cheap mortgages. According to James Pickford, deputy editor of the Financial Times, “The mood could hardly be more different from the crisis of 2008 when the banking system froze and lending dried up. Now, mortgage deals have hardly looked better or more abundant. Swap rates used by lenders to price home loans have fallen since the referendum, giving them room to sweeten fixed-rate deals that were already at record low rates. Despite all the speculation, HSBC have just launched the lowest-ever 2 year fixed rate at 0.99%.”
“Apart from macroeconomics there is also the local factor,” continues Chris. “Prices in Swindon have never fluctuated wildly in the same way as bigger cities. There are several reasons for that stability. One, it’s not a place that attracts overseas speculators like London or other locations on the M4 corridor. Two, the town has a young population and pretty much full employment. And as I said, if prices are accessible to young first-time buyers that kick-starts the whole chain.”
“Property is always a good long-term investment, regardless of short-term trends. Data produced by Lloyds and Halifax shows that house prices have risen 428% since they began tracking prices in 1983. Even factoring in inflation and wage rises, UK house prices have risen by 101% in those 33 years.”
There is also the bigger picture. “Buying property is not just about acquiring an asset, it’s about buying a home to live in with your family and to make a life,” says Chris. “Some forecasts are predicting a flat 2016 and falls of 3% in the next two years, but if non-financial circumstances mean now is the right time for you to buy or sell, then a 3% variation shouldn’t be a deciding factor. Things like relocating for work, wanting a house nearer to your children’s school, getting married or needing more space have a more tangible impact on people’s lives.”
Business as usual is also the message on the rental and lettings front. “Most landlords realise that selling their properties is a bad move in the long term,” says Mike Dewhurst, Swindon’s most experienced buy-to-let specialist. “The new stamp duty rates for second properties will make it more expensive to buy rental properties in the future, and crucially, rental demand in Swindon is still very high which means rents are well placed to resist pressures from any economic downturn.”
“Rental yields are running at 5% which is a very good return, especially as alternative investments are less certain. The government keep changing the goalposts on pensions, and there are increasing limits on the amount high earners can put in. By contrast, a buy-to-let property is a tangible asset and a safe long-term investment.”
“My message to vendors, landlords and buyers is to act in the same way you would have done if Britain had voted to remain,” concludes Mike. “If you are buying, do your research and take advantage of great mortgage offers. If you are a landlord or buy-to-let investor, compare strong rental yields to riskier alternatives. If you are a vendor, let Dewhurst & Co market your property to the widest possible audience.”
Or as another Financial Times headline on Brexit put it: “Keep calm and carry on”.
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