62.2% of Folkestone & Dover Voters voted to leave the EU – What now for the 19,551 Folkestone Landlords and Homeowners?

Posted: 24/06/16 12:29 PM

It’s 5.50am as I start to type this article and David Dimbleby has just announced the UK will be leaving the EU as the final votes are counted. As most of the polls suggested a Remain Vote, it came as a surprise to most people, including the City. The Pound has dropped 6% this morning after the City Whiz kids got their predictions wrong and MP’s from the Remain camp are using words like “challenging times ahead”.

.. and now the vote has been made .. what next for the 12,195 Folkestone homeowners especially the 6,080 of those Folkestone homeowners with a mortgage?

The Chancellor in the campaign suggested property prices would drop by 18%. Using Treasury estimates, their method of calculating this was tenuous at best, but focused around the abrupt and hasty increase in UK interest rates, which in turn would raise the cost of mortgages, and therefore lower demand for property, causing a drop in property prices.… and I would say, yes .. that will probably happen.

Folkestone Property Values

Folkestone property values will probably drop in the coming 12 to 18 months – but by 18%?  I am sorry, I find that a little pessimistic and believe that figure was rhetoric to get homeowners and landlords to vote in a particular way.

But the UK property market is quite a monster. Since the last In/Out EU Referendum in June 1975, property values in Folkestone  have risen by 2183.4% (That isn’t a typo) and whilst property prices did drop nationally by 18.7% between the peak of 2007 and bottom of the market in 2009, when one compares property values today in the country, compared to that all-time high of 2007, (the period before the financial crisis of the Credit Crunch of 2008/9) .. they are still up 10.14% higher.

Another Credit Crunch?

And so, notwithstanding the Credit Crunch, the worst global economic outlook since the 1930s and the recession it brought us, a matter of a few years later, the Government were panicking in 2012/3/4 that the housing market was a runaway train.

Now the same Credit Crunch doom-mongers and Sooth-Sayers that predicted soup kitchens in 2008/9 are predicting Brexit meltdown. Bad news sells newspapers. Stock markets may rise, stock markets may fall, yet the British public continued to buy property in 2009/10 and beyond. Aspiring first time buyers and buy to let landlords dusted themselves down, took a deep breath and carried on buying… because us Brit’s love our Bricks and Mortar .. we need a roof over our head.

However, as mentioned previously, if the value of the pound drops, in the past UK Interest Rates have risen to reverse that drop. However, whilst a cheaper pound will make your pint of Sangria a little more expensive on your Spanish holiday this year and make your brand new BMW pricier .. it will make British export cheaper. Which is great for the economy.

Interest rates

… and what of interest rates? Since 2009, interest rates have been at 0.5% and lots of people have become accustomed to those sorts of levels. So what if interest rates rise .. end of the world? Interest rates in the 1986/88 property boom were on average 9.25%, the 1990’s they were on average around 6.5% and uber-boom years (when UK property values were rising by 20% a year for three or four straight years across the UK) .. 4.5%. Many of you reading this who are in their 50’s and older will remember interest rates at 15%.

But I suspect interest rates won’t rise that much anyway, as Mark Carney (Chief of the Bank Of England) knows, raising interest rates causes deflation – which is the last thing the British economy needs at the moment. In fact they have been printing money (aka Quantitative Easing) for the last few years (which causes inflation) to the tune of £375bn a month. A bit of inflation because the pound has slipped on the money markets (not too much mind you) might be a good thing?

.. because whilst property values might drop in the country, they will bounce back. It’s only a paper loss.. because it only becomes real if you sell. And if you have to sell, again as most people move up market when they sell, whilst your property might have dropped by 5% or 10%, the one you want to buy would have dropped by the same 5% to 10% .. and here is the best part – (and work your sums out) you would actually be better off because the more expensive property you would be purchasing would have come down in value (in actual pound notes) more than the one you are selling.

The Folkestone  landlords of the 4,701 Folkestone buy to let landlords have nothing to fear either, nor do the 11,612 tenants living in their properties.

Buy to let is a long term investment. I think there might even be some buy to let bargains in the coming months as some people, irrespective of evidence, panic.  Even if we pull up the drawbridge at Dover and immigration stopped today, the British population will still increase at a rate that will exceed the current property building level. Britain is building 139,600 properties a year, but needs according to the eminent ‘Barker Review of Housing Supply Report’, the country needs to build about 250,000 properties a year to even stand still, and as the the birth rate is increasing, the population is living longer and just under a quarter of all UK households now are occupied by a single person demand is only going up whilst supply is stifled. Greater demand than supply equals higher prices. That is definitely a fact.

So, what will happen next?

Well, there are many challenges ahead. The country has spoken and we are now in unchartered territory – but we have been through a couple of World Wars, an Oil Crisis, Black Monday, Black Wednesday, 15% interest rates and a Credit Crunch … and we survived!

And the value of your Folkestone  property? It might have a short term wobble… but in the long term -it’s safe as houses regardless.

3 comments on “62.2% of Folkestone & Dover Voters voted to leave the EU – What now for the 19,551 Folkestone Landlords and Homeowners?”

  1. Carrie says:

    I do remember the huge interest rates! I was lucky am my husband worked for a bank! Ours was only 3%!
    What I do remember is our friends who lost their homes

  2. Plummymummy says:

    I disagree that Folkestone house prices will stabilise in the long term.

    I am a Londoner who fell head over heels in love with your beautiful town, its beautiful architecture and it’s dynamic regeneration. I was keen to be a part of that, to invest and improve property, and to spread the word about what a great town Folkestone is.

    Now, with a heavy heart, I have to pull out of my Folkestone property purchase, due to exchange in the next week or so: On one level due to macro factors – the economy will definitely contract, likely causing another recession, and house prices will definitely fall and stay low as lending restrictions increase and probably interest rates too.

    But on a more local level, this also makes the harbour redevelopment that much more of a pipe dream – the weakening pound, and 50% fall in housebuilders share value are clear bellweathers of an inevitable slump in large scale construction investment.

    Secondly, France are quite understandably going to wash their hands of any cooperation on UK border control and will cease hosting it on French soil as soon as they possibly can. So now we have the spectre of a Calais-esque scenario on this side of the tunnel and I can’t, even with my most optimistic hat on, see how that can have anything other than a hugely negative impact on Folkestone.

    62.2% of YOUR population voted for this. It is an own goal of quite staggering proportions. I saw the front page of a local newspaper – lots of old white men cheering. What were they cheering for?

    I am heart-broken that the exciting story I hoped to play a tiny role in is now just nostalgia. But as to the 62.2%, I am just speechless with incredulity as to how Folkestone, the town that stands to be hit the hardest by having to single-handedly cope with border control without any cooperation whatsoever from our European neighbours (in fact the opposite – their agenda will be to make it as difficult as possible for us as an example to other EU states), can have willfully and deliberately and voluntarily brought this upon themselves??

    This is not a rhetorical question, I’m genuinely interested to hear if Folkestonian Leave voters are feeling utterly horrified at what they’ve done?

  3. Tracey says:

    It’s highly unlikely that the majority of “leave” voters regret their decision – though I have seen a handful of posts of Facebook from people expressing their frustration about the post referendum revelations (on both sides)

    I still believe in Folkestone’s growth and regeneration and I’m genuinely excited about progress so far and what I see planned for the future.

    Brexit however is a separate matter that’s going to take time to come to a head. David Cameron has already stated that he expects his successor to handle the negotiations – which is a poisoned chalice of mammoth proportions. Before the new leader can proceed it’s likely that parliament will be asked to vote on whether we trigger Article 50, and from that date we have 2 years to negotiate the most favourable terms possible.

    This will be a period of uncertainty – but when money’s tight the Brits tend to choose a stay-cation. So Folkestonians have an opportunity to grab market share in domestic tourism.

    I do hope we all pull together to make the best of what’s happened.

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