There are many armchair economists and even professional economists predicting Armageddon when it comes to the property market, yet the Abergavenny (and UK) property market is essentially very sound. When George Osborne was Chancellor, he warned us that if we voted to leave the EU two things would happen. Firstly, the UK property market would crash, and property values would drop by 18% in the two years after the vote; and secondly, there would be an ‘economic shock’ to the country’s economy that would increase the cost of mortgages (through increased interest rates as there would be a run on the £).
Yet, UK GDP rose by £132bn in the two years after the referendum, interest rates actually dropped and locally with regard to property values…
Abergavenny house prices rose by 14.8% in the 2 years following the Brexit vote
Lloyds have predicted an enormous 30% fall in property prices over the next 36 months whilst conversely, Savills have suggested a short dip of 5% during the summer, based on very low transaction numbers, with property prices bouncing back to be just over 15% higher in 5 years’ time. This assumes that the UK economic downturn is short and sharp, and that no substantial gap opens up between supply and demand in the property market.
Abergavenny Property Values after the 2008 Credit Crunch crisis dropped 11.7% between 2008 and the end of 2009
Yet, the circumstances of the 2008/9 property crash were fundamentally different to today. Many people assume that there will be a re-run of the 2008/9 and 1988 property crashes in the coming 12 months in terms of house value falls. Yet, unlike the last recession, this dip has not been led by previous years of strong property price growth like the other two crashes. House prices in many parts of the UK have been down in the last 12 months.
You would be forgiven for thinking that Abergavenny first time buyers who have already saved their deposit could grab a bargain in the coming months as they will have less competition in the market because landlords are holding back from investing in additional rental properties. This stems from press speculation that rent arrears are sky high due to tenants being unable to pay their rent. Yet our own experience, backed up by evidence from many professional bodies in the private rental sector, indicates that rent arrears across the whole of the country are very low indeed, despite Covid-19.
Interestingly, the firm Yomdel who handles our ‘web live chat’ and offers ‘phone support’ for thousands of estate and letting agents have reported national activity is higher than during the two months of the Boris Bounce (in January and February 2020) and the number of new buyer enquiries for the last two weeks is double (108.9% higher to be precise) than the 2019 yearly rolling average. New landlord enquiries are 32.1% higher than the 2019 average and tenants are 150.1% higher than the 2019 average. These are all great signs and go against doom monger economists.
My best advice to all Abergavenny property buyers, be they second time buyers, first time buyers or landlords, is to buy with a medium-term view of future Abergavenny property values, instead of an expectation of looking to make a quick profit by flipping a property (i.e. selling it quickly).
Mortgage interest rates are at a 325-year low. If you know you are going to be living in your first (or second) Abergavenny home for five years and you want the peace of mind of knowing precisely what your mortgage payments will be, then this is very attractive. The best advice I can give is, don’t assume what you can or can’t borrow. Speak to a whole of market mortgage broker, to see what is possible.
If you think about it, if you are planning to keep your home for the medium to long term, it’s inconsequential if Abergavenny property values drop or not, or if they do drop whether they bounce back quickly (or not as the case maybe) because it’s impossible to know the bottom of the property market. I would say if you find the right Abergavenny property for you, at the price that feels right and you are going live in that property for the next five to ten years, it’s not a bad time to be buying.
There may always be an assumed better time, but we are talking about your future home – a home for you and your partner and family, be that your kids, your jack russell, cat, pet or favourite pot plant.