Telford Property Market Post Brexit

The impact that the EU referendum decision will have on house prices and the economy in general has dominated the media in recent times.

The general consensus on a national scale has been that leaving the European Union will have a negative effect on house prices - but Michael Nettleton, director of Nock Deighton estate agents, has a different view.

Michael says that house prices in Telford in particular could actually become more sustainable as a result of the vote.

As he explains: “The referendum vote will ultimately have a sustained positive effect on house prices in Telford and the housing market at large. Depending on your politics, you may raise an eyebrow at this point, but let’s just have a look at some key economic ideas and data to see why this may be the case.

“Plucked from obscurity and made a posthumous star during the 2008 financial crisis, a little-known economist named Hyman Mynsky held the hypothesis that risk-taking during the boom times ultimately sows the seeds for greater instability during a recession.

“This is a repeating cycle of boom and bust we have seen over and over again with monotonous regularity for generations. Regardless of your politics, the economic shock of the Brexit vote may have done the Telford housing market a favour - which is good news if you want to sell a house in Telford, or indeed if you are looking to buy.

“Inflation is imperative for the health of the economy, but just like Goldilocks, it’s a case of not too hot, not too cold, we want it to be just right!

“With the Bank of England targeting an inflation rate of 2%, Telford house prices have massively outperformed this figure with an average rise of 4.15% in the last 12 months.

“That might sound great in principle, but let’s just think about how this would affect the the average Telford homeowner in practice.

“The average house price in Telford is currently £146,904. Let’s assume the plan over the next year for a typical homeowner is to move to a £300,000 house in Priorslee.

“If both properties have increased in price by 4.15% over that period, the differential between the two properties would have potentially grown by over £6,000.

“This would increase the amount of borrowing required for the buyer, and also limit the pool of buyers with the necessary funds for the estate agents in Telford to target.

“When moving house, while the house price is an important factor, the differential and ultimate cost of moving is actually the most crucial calculation.

“If Brexit has managed to give people a moment to take stock and temper the boom, we can have steady and sustained house price growth for a much longer period.

“I'm not sure if Mr Mynsky or Goldilocks would have much else in common, but I think we would be confident they would both agree that 'just right' is what is best for Telford.”