Even the Brexit vote has not hindered Stoke-on-Trent’s steady
rise in property value, as Stoke-on-Trent property values went up 0.2% last
month alone, leaving Stoke-on-Trent values 6.79% higher than a year ago. An
increase in demand from buyers and an uninspiring level of supply (i.e.
the number of properties on the market) has driven up the value of the Stoke-on-Trent’s
housing.
...And that is where the issue is. With Brexit, the coalition of
the 2010-15, a double-dip recession and post credit crunch fallout – I was
perplexed that the Stoke-on-Trent property market (and values) has remained so
strong, still 12.5% higher than 20 months ago. That is until you start to look
into the real reasons why we find ourselves in such a great place.
The Stoke-on-Trent (and the UK) housing market is built on the
foundations of basic economic rules that any GCSE Economics student should
understand. However, at a time when, as a country, we seem eager to uncouple
ourselves from all manner of proven facts, anything is up for grabs.
Even the wary RICS said throughout the UK, most of its Chartered
Surveyors anticipated house prices to increase in the next six months, which
seems contradictory
given economic cautions from Mr Hammond and HM Treasury. Even though inflation
will rise to around 2% to 3% in 2017 and perhaps a little more in 2018 because
of Sterling’s devaluation, together with a high probability of a decelerating GDP
and a slight rise in unemployment, how can the RICS and most of my landlords be
so confident about the value of our homes?
Well, look at from where we are starting. Nationally, a base of
low unemployment, low inflation and preposterously low interest rates.
Confidence also plays a part. Confidence can supersede basic economic facts for
a short time at least, which is why actual property market changes tend to be
more exaggerated, as confidence can turn both positive and negative very
quickly. The fact is, there is a long-term relationship between property
values, wages and unemployment. For example, looking at
the graph below, you can quite clearly see the ratio of property values to
earnings is nowhere near as high as it reached in 2008 and currently is in the middle
of the range for the last 30 years. As a country, we are in a good place.
By
April 2017, Article 50 will be invoked. This will bring additional political
tomfooleries and economic ups and downs. With both purchasers and vendors
predisposed by the 24-hour news cycle, which let’s face it, gets more haphazard
by the day, it is likely to prove a challenging couple of years … and yes, Stoke-on-Trent property values
might drop slightly in 2017, but based on what we know of the UK plc now, the
UK and Stoke-on-Trent property values are not projected to move that much over
2017 or 2018. Going into the next two
years, we are in much better financial shape as a country compared to the last
two crashes of 1987 and 2008.
But, on the other side of the coin, what we also know is that we
don't know much about the form of our economic future or indeed many other
facets of our lives. Confidence will continue to be the key player in the Stoke-on-Trent
housing market for a while longer - yet this may spur some much needed
second-hand market activity? Now, where is my crystal ball?
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