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CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Wednesday, 14 September 2016

UK property market DESTROYED by Brexit?

Geronimo!

Well, everyone else appears to be going for the most ridiculous clickbait headlines on this story, so if you can't beat them...

Some publications have even already shifted from London prices "crashing" back to reporting on unaffordable housing within the space of a couple of months. 

As is so often the case the truth is somewhat less exciting, with volumes down sharply - in fact, they were already under pressure before the referendum - but prices fairly unperturbed to date.

In the event the Office for National Statistics reported that the average UK house price was £217,000 in July 2016. 

This is £17,000 higher than in July 2015 and £1,000 higher than last month.

Note that the July figures incorporate plenty of activity and transactions pre-dating the referendum.


The main contributor to the increase was England, where house prices increased by 9.1 per cent over the year, with the average price in England now moving up to £233,000. 

The ONS rather charitably didn't mention that the average house price in Northern Ireland of £123,000 is still 45 per cent below the July 2007 peak of £225,000 (note how the revised historical data doesn't even try to capture the monthly moves in Ireland through the super-boom and subsequent bust, reporting only quarterly averages). 


The widely reported London crash has been a fizzer to date, with the average price rising by 12.3 per cent over the year to an all-time high of £485,000. Some interesting food for thought here for those claiming that regional property is a better bet than capital cities, with London and its immediate surrounds accounting for more than 100 per cent of real price growth over the last dozen years. 


In truth, the London story is rather more nuanced, with transaction volumes down very sharply in some boroughs, and the prohibitive stamp duties on premium properties knocking the Kensington & Chelsea market for six (with its average price of £1.3 million). 

Prices are down by 3 per cent in the borough over the year to July. Prices also fell moderately in the upmarket Hammersmith & Fulham borough, down by 1.6 per cent.

On the other hand, the average price in Croydon has continued to boom by a further 19.4 per cent, adding nearly £60,000 in just a year to hit £365,479. Prices in Croydon have gone ballistic since AllenWargent recommended it as a hotspot in 2013/14. 

A number of localities in the Home Counties are experiencing very rapid house price inflation. 


The East of England region recorded the highest annual growth, with prices increasing by 13.2 per cent over the year. As already noted, annual price growth in London remained very high at 12.3 per cent, followed by the adjacent South East region with an 11.9 per cent annual growth.

Post-Brexit trends will become clearer over the next six months.