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Open election causing uncertainty in property market
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
Growing uncertainty about who will be residing in Number 10 after May 7th is having a negative knock-on effect on the housing market. Experts are concerned that the property market is stationary, due to fears about not only the election result, but features such as increases in stamp duty. This has lead to a drop in the supply of housing, whereas prices of property for sale have been driven upwards.
‘Cork in the market’
The Royal Institution of Chartered Surveyors (RICS) believe that there is heightened competition between buyers to purchase the small number of homes currently on the market. This in turn has forced prices up following months of fairly insignificant movement, leading estate agents to express their worries over a housing bubble being created.
RICS has estimated that prices will rise by 4.5% per year over the next five years, which will push home ownership further away for more young people. Tony Jamieson, estate agent at Clarke Gammon Wellers and member of RICS, believes that fears over Ed Milliband’s proposed mansion tax are seeing many high-value property owners staying in their present homes. Jamieson said that, ‘people with properties worth £2 million and above are fearful of any form of mansion tax so they are sitting tight rather than moving to bigger properties.’ Mr Jamieson believes this is, ‘putting a cork in the top end of the market,’ which, ‘affects the chain of buyers and sellers,’ as a result.[1]
Jamieson went on to say that, ‘we are 40 per cent down on stock compared with this time last year and we have 38 per cent more buyers, so properties lower down the chain are going for a premium.’[2]
Election concerns
Landlords of rental properties who are contemplating the sale of their portfolio are, according to Mr Jamieson, waiting for the result of the election. This has led to a reduction of affordable homes becoming available on the market.
Benson Beard, member of RICS and employee of Bective Leslie Marsh, believes that the proposed mansion tax is to blame for the housing bubble. Beard stated that, ‘the mansion tax is really the crux of this. Buyers at the top end don’t want to risk buying at full price when Labour hasn’t announced all the bandings or the different levels of mansion tax that would be payable. There is very little detail.’[3]
Stamp Duty
Chancellor George Osborne’s stamp duty reform has also seen an affect on the property market, with people purchasing homes over £1m paying more in stamp duty as a result. Head of residential research at Savill’s estate agents, Lucian Cook, believes the changes of stamp duty obligations are a big factor affecting supply of housing. Cook said that, ‘people are less inclined to move house and the resulting shortage of houses will underpin price growth.’[4]
Open election causing uncertainty in property market
Mr Cook stated that Savill’s estimate prices will rise, ‘by 23% over the next five years in the regions and by 10.4% in London.’[5]
The chief economist of RICS, Simon Rubinson, described the increase in house prices as, ‘worrying.’ Rubinson said that, ‘the trends visible in the latest survey,’ by RICS, which showed a fall in properties on the market for a second consecutive month, ‘urgently need to be addressed by the next government.’[6]
Milliband misery
Lawrence Hall of property website Zoopla, left no uncertainty about which political party wouldn’t be getting his nod in the ballet box. Hall suggests that, ‘a Milliband win in May would have a negative impact on the UK housing market in the short to medium term.’ He continued by saying, ‘the Tories have paved the way for considerable strides in the property recovery, but the Labour proposals for a punitive tax on homes and restrictions on some of the first-time buyer support systems would create uncertainty and could well pull the rug out from under the feet of recovery and dampen market confidence.’[7]
As the election campaigns hot-up, the only thing that remains certain alongside bold statements, false smiles and questionable pledges, is that the housing market will continue to struggle until May the 7th has come and gone.
[1-7] http://www.telegraph.co.uk/news/politics/ed-miliband/11540462/Mansion-tax-fears-and-election-jitters-crippling-property-market-and-causing-price-bubble-estate-agents-warn.html
