It’s difficult to read too much into the current housing data because the combination of Brexit and an election mean people are sitting tight while they wait to see what’s happening next. The hiatus, however, is likely to be short – the moment the election is over there may well be a surge in activity, although with Christmas to add into the mix, that surge will probably not happen until the New Year.
In the meanwhile there are some short term distortions at play. As ever, Rightmove’s index is the most up to date. According to them, prices were down in November by 1.3%, whilst the number of sellers dropped by almost 15%. It is more or less what you’d expect from a ‘wait and see market’, although the actual number of sales is holding up well. They were only 2.9% below last year’s figures and suggests there are quite a few buyers out there trying to get a deal before a post-election bounce.
According to Miles Shipside, Rightmove director and housing market analyst:
“I’ve seen lots of unusual events affecting the property market in my 40-year career, but a Brexit deadline followed by a snap general election six weeks later is obviously a new combination for me and for many thousands of buyers and sellers. Elections normally dampen activity as uncertainty causes a degree of hesitation, but this one is being called to try to break the deadlock after three years of uncertainty. A more certain outlook, whatever it may be, would be a welcome change for those who are contemplating moving.”
In London, the shortage of sellers is even more acute, with a 26.9% drop compared to last year. Prices were down, too, but there are also signs of London’s ongoing recovery. If you look at annual prices, they have risen in the centre of London over the last 12 months – up 0.1% and in Zone 1 areas they rose by 1.0%. Across the whole of London, they fell on average by 0.8%, but that was an improvement on the 1.1% drop the previous month.
So what’s going to happen once it’s all over? If the Conservatives get in, there is likely to be a considerable bounce. There’s nothing much to worry about in their manifesto, which is deliberately very uncontroversial. Clearly, if they get a big majority, they may well be braver and that may be in the favour of homeowners.
Their main pledges are; to introduce long-term fixed rate mortgages, although with such low interest rates currently on offer many are questioning their use. They have also pledged to raise stamp duty by 3% for foreign buyers, which is likely to prove popular with the public but unpopular with house builders and agents. They have also promised greater rights of repossession to “good” landlords but at the same time they are pledging to abolish no-fault evictions. There is, of course, lots of talk about increases in house building.
In the unlikely event of a Labour majority, there will be some more radical changes which could have some serious implications for the housing market. These include; bringing in rent controls. “No-fault” evictions will be abolished along with a promise of funding for new renters’ unions.
The Right to Buy approach championed by Margaret Thatcher will be reversed – councils to be given the power to buy back properties from private landlords. These changes are likely to result in a large scale exodus from the PRS (Private Rental Sector).
However, like the Conservatives they have also said they will increase house building, with one million new homes promised over the next decade, including 150,000 council houses per year.
They are also likely to increase the tax burden on homeowners, especially those with second homes and will almost certainly lower the inheritance tax threshold, reducing the amount of money inherited from property sales.
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