Oxford Property Values increase by 2.88% ... good or bad news?

Even the Brexit vote has not hindered Oxford’s steady rise in property values. Last month alone Oxford property values went up 2.88%, leaving them 6.79% higher than a year ago.

So why, given Brexit, the coalition of the 2010-15, a double-dip recession and post credit crunch fallout – has the Oxford property market remained so strong, still 20.1% higher than 20 months ago?

The Oxford housing market is built on the foundations of basic economic rules that any GCSE Economics student should understand. However, at a time when we seem eager to uncouple ourselves from all manner of proven facts, why is it that Oxford’s property seems to be in a ‘post-fact bubble’?

Even the wary Royal Institute of Chartered Surveyors (RICS) said most of its Chartered Surveyors anticipated house prices to increase in the coming six months, which seems contradictory given economic cautions from Mr Hammond, HM Treasury and The Bank of England. Given that inflation will rise to between 2% & 3% in 2017 because of Sterling’s devaluation, and uncertainty remains about how Brexit will impact the wider economy, how can RICS and most of my landlords be so confident about the value of their homes?

Nationally the starting point is a strong base of low unemployment, low inflation and preposterously low interest rates, while in Oxford, the local economy continues to perform well. Confidence also plays a part. But the fact is, there is a strong 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.  Whilst Oxford remains one of England’s least affordable property markets, demand for homes – rented and owner occupied continues to far out-strip supply, and until the supply increases via new house building and via new private rental supply, the market will continue to be buoyant.

By April 2017, Article 50 will be invoked. This will bring further doomsday press commentary, polarised political opinion and short term crises of confidence. 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, Oxford property values might rise less reliably during 2017, but based on what we know of the UK plc now, the UK and Oxford 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 2008, and since 2008 Oxford house prices have risen reliably – last year they were up 6% again and up 30% since 2013.

Confidence will continue to be the key player in the Oxford housing market for a while longer – despite being pro-remain, Oxford and its home owners need to look for the positives, stay confident and continue to invest in a solid long-term asset.