From a property perspective, it would appear that the latest budget will not be enough to light November’s fireworks. Nevertheless, overall, it did hint at a surprisingly stable economy, with improved growth prospects and an apparent end to the tighter austerity regime.
The one thing the property market needs is to find its own equilibrium with minimal government involvement. We know that a healthy property sector, based on reasonable sales volumes, is good for the economy in terms of jobs, home improvement businesses, SDLT (stamp duty) and VAT revenues. However, past “incentives”, mostly for political gain, but apparently designed to stimulate the market, have often artificially inflated house prices.
As estate agents, we are of course passionate about securing high prices for our clients. It’s what we do, responsibly, of course. But Mr Hammond’s budget, for the first time, recognised that the only way many people can buy their own first home is to do so via shared-ownership. So he abolished SDLT on shared ownership homes up to £500,000, although this is only expected to cost the government £5 million – not much in the grand scheme of things. Remember, shared ownership does not mean buying a property with another person; it means buying only part of a property and effectively “renting” the other part, usually from a housing association.
We believe that SDLT should ideally be completely overhauled, as the cost of moving for most people is at an all-time high – and this has little to do with estate agency fees, which are actually the lowest in the world!
Nevertheless, property prices have not fallen by the 10%-18% as the Treasury predicted in May 2016, as a warning in the event of a pro-Brexit referendum result. In fact, they have continued to rise, by around 9% since then, with transaction levels 13% above the same time last year (source HMRC). Wage growth is actually increasing strongly and lending remains historically low, with unemployment at its lowest level since the mid-1970s.
Whatever happens with Brexit, it seems that people are once again prioritising a house move in response to lifestyle changes such as marriage, family, schools, jobs, divorce, downsizing, etc. They seem to be increasingly immune to the uncertainty surrounding Brexit and are getting on with their lives – a wonderfully British ideal that has stood the test of time.
Figures released from various sources suggest that the market – in terms of house prices at least, are holding their own, despite the political uncertainty we are currently witnessing. Year on year figures ranges from +0.6% (Land Registry) to +1.1% (Halifax). Nothing spectacular as an investment return, but it does demonstrate once again how resilient and reliable property can be – especially when it is regarded as a home rather than a commodity.
In the absence of the speculative buyers of yesteryear, the fact is that today’s buyers still need to buy and they have real reasons for doing so – job, marriage, children, divorce, debt, death etc. Affordability is at a record high and both unemployment and interest rates remain at a record low. In other words, all the metrics are in place for sustained stability in the housing market. If anything were to have dramatically affected the property market – it would have done so by now, and any issues caused by a weaker pound have apparently been offset by an influx of overseas investors looking to pick up a bargain. Of course, prices have also been maintained by a slight shortage of stock in relation to relatively high demand. This shortage seems to have been caused by potential sellers sitting on the fence waiting to see the outcome of Brexit. Interestingly their “worry” could actually prove to become a self-fulfilling prophesy as, once we have some clarity over Brexit, the floodgates will no doubt open, and many people will want to get moving once again, thereby increasing supply and potentially weakening prices (a bit).
In the meantime – we are enjoying the current level of buyer activity and if you’d like to take advantage of this lull before the storm, you could do worse than to consider selling before the end of the year.
Please feel free to call us today for a free no-obligation marketing proposal. You might be in for a pleasant surprise!
Neil Newstead FARLA MNAEA MIRPM
CEO – Oakfield Estate Agents