Tory win predicted to bring confidence to property market
AS soon as it was certain the Conservatives had won the General Election last Thursday, the
AS soon as it was certain the Conservatives had won the General Election last Thursday, the London housing market went into overdrive, according to estate agencies there, with £2million-plus properties going on the market - and being sold - in a matter of hours. Is this a sign the property market is set for growth, bringing welcome stability to the markets? Standard Property put her ear to the groundâ?¦
Stephen Christie-Miller, office head, says: “The result of the election will bring renewed confidence across all levels of the property market as both political and economic certainty returns.
“At the £2m-plus level of the market, we are anticipating much of the deferred demand from the pre-election period to flow back â?? particularly given the mansion tax spectre is now removed. Indeed, our offices witnessed an uplift in interest in the immediate aftermath of the result from purchasers who had been reluctant to commit to buy in the lead-up to May 7.
“On the supply side, where choice has been fairly limited so far this year, we expect would-be sellers who had adopted a ‘wait and see’ approach to bring more stock to the market. In terms of potential price growth, our research department is predicting the greatest price growth (of up to +23.9 per cent over the next five years) in the prime markets outside London, including Henley.
“Improvements in the London market are likely to be sufficient to trigger a renewed ripple effect into the markets beyond the capital, as those relocating from London find it easier to sell their existing home and take advantage of the price differentials with the rest of the country.
“It is at the sub-£1.5m level of the market where we have seen most activity to date, and we are expecting this part of the market to gain even more momentum in the coming months. Whilst continued regulation of the mortgage markets is likely to constrain house price growth, our research department is nevertheless predicting average UK price growth to be 19.3 per cent over the next five years.
“Given where London prices sit relative to the rest of the country, we would expect the strongest medium-term prospects in those locations closest to the capital. Political certainty is also likely to ensure an increase in house building, as planning policies put in place prior to the election gain further traction. However, there remains a pressing need for substantially increased new-build supply and a far more co-ordinated long-term housing strategy for the UK.”
Peter Fuller, lettings managing director, says: “The continued rise in house prices poses a dilemma for the new government. The positive is that thanks to low mortgage rates, current home owners feel richer and spend more money, boosting and strengthening the economy.
“However, many others are being left behind and are forced to stay living at home or to remain in rented accommodation â?? so how do the Conservatives plan to address these issues? Their ‘homes for all’ manifesto is aimed at the aspiring homeowner with a first-time buyer ISA and an extension of Help to Buy. The Conservatives ruled out the idea of mansion tax, and promised to build 200,000 starter homes for first-time buyers, more garden cities and a further 400,000 new units from brownfield land by 2020.
“Demand from buyers and tenants is still greater than supply, so it’s important that all homes bought through the Right to Buy scheme are replaced. This will happen as long as local authorities are given the power from the government to reinvest money into more house building to satisfy the demand.
“Confidence in the property market will encourage more movement between buyers and sellers alongside more house building, which is great for investors. A lot of new homes developments are planned throughout the local area and with interest rates remaining at record breaking lows I believe even the most cautious of investors will now have the confidence to grow their portfolios.
“The volume of transactions in the property market has consistently experienced a significant upturn following a general election, with the decision to buy or sell made easier by greater clarity surrounding the political outlook. Following the last two elections this phenomenon has been more pronounced in the Romans’ market region, which includes Reading, Wokingham, Maidenhead, Basingstoke, Farnham,
Farnborough and Camberley, than the wider UK market. In 2010, in the region covered by Romans, there was a 26.5 per cent increase in transactions in the three months after the election when compared to the prior three months; this compares to 24.7 per cent nationally.
“Interestingly, for homes of £1m or more in the three months following the last election there was an even greater, 48 per cent uplift in sales, demonstrating the confidence felt by buyers to commit to major purchases.
“Traffic to our website was 36 per cent up on the weekend of May 9 and 10, and incoming calls or enquiries to Romans were 16 per cent up, compared with the previous weekend.”
Jamie Obertelli, residential research PR manager, says: “The main initiatives announced by the Tory party prior to the election relate to attempts to raise new-build delivery through a focus on brownfield development land, a new Right to Build initiative and self-build-friendly policies.
“The Conservatives have also focused on easing the path to home ownership through an extension of the Right to Buy to apply to tenants of registered social landlords, and through an expansion of the existing Help to Buy programme.
“As with all policy programmes put forward by the main parties, the Conservative manifesto maintained a notable focus on encouraging delivery and, to a lesser extent, on measures designed to tackle housing affordability issues.
“The main market impact is likely to be seen through renewed economic and consumer confidence following the return of what looks likely to be a relatively sustainable government.
“In the housing market this should be expressed through rising transaction volumes in Q2 and Q3, and price rises in the mainstream market during the remainder of 2015.”
David Tate, joint managing director, says: “The UK housing market is open for business as usual, with a clear mandate for the government to continue its work on the recovery.
“The Labour Party carried the threat of the mansion tax, which has caused a number of people to sell already, but of much more damage would have been rent controls, which would have had a very damaging effect on the increasing private rental sector.
“In short, this is a victory for people who want more control over their lives, and a defeat for increasing government control.
“The financial markets are already brightening, and we expect much more action and fluidity in the sales market, with the London market continuing to supply a stock of good buyers who migrate down the M4, more easily obtainable finance for home owners, and a general feeling of security and prosperity which will encourage people to climb the property ladder, invest in property and help family members to do so as well.”
• For a full list of local estate agencies, visit www.henleystandard.co.uk/property/agents.php