Brexit - Part 5 House
Okay, the usual twaddle about house prices is out. The
chancellor of the exchequer and his mates are getting worried
over the Brexit vote so they wheel out all the scary things they
think will make people vote to stay in. As usual the comments
are pure rubbish. Whatís new?
According to Osborne house prices will fall by 10% if we leave
the EU and will rise by 10% if we stay.
Sorry guys, Iíve been keeping score on government comments and
think tanksí predictions on house prices. Over the decades I
have yet to see a single correct forecast. Thatís it guys, there
has been a 100% failure rate. The only way they get away with
their forecasts is because people have very short memories, and
they seem to have an inbuilt belief in any document which has
some kind of official stamp on it. Mine, of course, have no
stamps on them, but Iíve never yet been wrong.
I have been doing analysis of house prices for nearly forty
years. I dont predict what is going to happen so I canít lose,
but I simply point out what is happening at the time, and how
that is likely to pan out over the coming year. Iíve yet to be
wrong in what I say.
So, what is my take on Brexit and house prices? Itís a
non-event. Brexit will make no difference to house prices one
way or the other. If they crash for some reason, that will not
be because of the referendum result. If they rise, similarly, it
will be nothing to do with the referendum. House prices work on
a totally different metric.
For starters, we have been told that sterling will plummet on
exit. As the polls veer towards an exit vote I note sterling has
been rising against the euro. Hereís the chart. If sterling is
doing okay, why shouldnít everything else do okay?
I am not going to say house prices will rise if we stay in. The
answer is, no-one knows what effect any change will have, but
the real driver of house prices has nothing to do with Brexit.
While weíre at it, letís have a look at some basic economic
indicators, which show what a complete disaster the EU has been
economically. They clearly indicate weíd be better off out. Here
First, GDP. Back in 1973, when we joined the EU (as it is now)
produced 38% of global GDP. When the EU formally began in 1993
it generated just under 25%.. Today this figure stands at 17%.
Thatís a 55% drop Ė a pretty significant slump compared to the
US which has witnessed a 27% fall in GDP over the same period.
Next up, wealth. Here, using GDP per capita as our measure, the
UK has inched up from 29th on the list of wealthiest countries
in 1973, up to 18th in 1993, and 13th today. Thatís not a bad
performance. But, interestingly, nations that border the EU but
are not actually members Ė the likes of Switzerland, Norway and
Iceland Ė have done even better. In 1973, just one of them made
the top ten richest countries. Today, all three make the grade.
Dont worry about the price of your house. It may go up, it may
go down. On the other hand, it may not.
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