I had an
interesting chat with a Wilmington landlord who owns a few properties in the borough. He popped his
head in to my office as his wife was shopping in the area (and let’s be honest
talking about the Dartford Property Market is a lot more interesting than clothes shopping!). We
had never spoken before (because he uses another agent in the borough to manage
his Dartford properties) yet after reading my blog on the Dartford Property
Market for a while, the landlord wanted to know my thoughts on how the recent
interest rate cut would affect the Dartford property market and I would also
like to share these thoughts with you……
Well it’s been a
few weeks now since interest rates were cut to 0.25% by the Bank of England as the Bank believed Brexit could lead to a materially
lower path of growth for the UK, especially for the manufacturing and
construction industries. You see for the country as a whole, the manufacturing
and construction industries are still performing well below the pre credit
crunch levels of 2008/09, so the British economy remains highly susceptible to
an economic shock. This is especially important in Dartford, because
even though we have had a number of local success stories in manufacturing and
construction, a large number of people are employed in these sectors. In the DA1,2
and 3 postcode areas, of the 45,928 people who have a job, 2,987 are in the
manufacturing industry and 5,037 in Construction meaning
6.5% of workers are employed in the
Manufacturing
sector and 10.9% of workers are in
Construction
The other sector of the economy the Bank
is worried about, and an equally important one to the Dartford economy, is the
Financial Services industry. Financial Services in the area employ 2,647
people, making up 5.8% of the working population.
Together with a cut in interest rates, the Bank also announced an increase in
the quantity of money via a new programme of Quantitative Easing to buy £70bn of Government and Private bonds. Now that won’t do much to the
Dartford property market directly,
but another measure also included in the recent announcement was £100bn of new
funding to banks. This extra £100bn will help the High St banks pass on the
base rate cut to people and businesses, meaning the banks will have lots of
cheap money to lend for mortgages .. which will have a huge effect on the
Dartford property market (as that £100bn would be enough to buy half a million
homes in the UK).
It will take until early in the New Year
to find out the real direction of the Dartford property market and the effects
of Brexit on the economy as a whole, the subsequent recent interest rate cuts
and the availability of cheap mortgages. However,
something bigger than Brexit and interest rates is the inherent undersupply of
housing (something I have spoken about many times in my blog and the specific
effect on Dartford). The severe undersupply means that Dartford property prices
are likely to increase further in the medium to long term, even if there is a
dip in the short term.
This only confirms what every homeowner and landlord has known for decades .. investing in property is a long term project and as an investment vehicle, it will continue to outstrip other forms of investment due to the high demand for a roof over people’s heads and the low supply of new properties being built.
This only confirms what every homeowner and landlord has known for decades .. investing in property is a long term project and as an investment vehicle, it will continue to outstrip other forms of investment due to the high demand for a roof over people’s heads and the low supply of new properties being built.
