Will re­cov­ery fall vic­tim as the coali­tion wields fi­nan­cial axe?

Have bro­ken elec­tion prom­ises and gloomy Con Lib fore­casts for fu­ture aus­ter­ity af­fected the prop­erty mar­ket? Weask the ex­perts.

Yorkshire Post - Property - - PROPERTY -

Martin El­lis, Hal­i­fax Chief Econ­o­mist. “There are signs that the mar­ket is slow­ing and we ex­pect prices to be flat this year and to re­main so for the next year or two. I don’t think there will be any sharp dips.

In terms of pro­posed cap­i­tal gains tax in­creases I think the im­pact will be mod­est. It will en­cour­age some peo­ple to sell prop­er­ties and that may dampen the mar­ket a lit­tle but it will prob­a­bly be a re­turn to the CGT sys­tem we had a cou­ple of years ago. Peo­ple who bought in the last five years won’t have made much cap­i­tal gain and those who bought well be­fore that are prob­a­bly in it for the long-term.

Mort­gage lend­ing will re­main tight over the next one to two years but in­ter­est rates should re­main at low lev­els. There might be a rise but it will be mod­est.” An­drew Bead­nall, of Bead­nall and Co­p­ley es­tate agents “Con­fi­dence came back to the mar­ket in the first quar­ter of the year partly be­cause a change of govern­ment was on the hori­zon. We saw a sim­i­lar up­lift in 1997.

But we got an elec­tion re­sult no-one ex­pected and we have a Con­ser­va­tive party reneg­ing on their prom­ises on taxes.

A lot of wealthy clients with sec­ond, third and fourth homes have been on the phone in droves ask­ing for val­u­a­tions as they are think­ing of off-load­ing them be­fore the 50 per cent tax band starts and cap­i­tal gains tax rises from 18 to a pos­si­ble 40 per cent.

Con­fi­dence has been knocked at the lower end of the mar­ket, too, and the only sec­tor that is see­ing a lot of ac­tiv­ity is the £250,000 to £500,000 mid­mar­ket as they have eq­uity, are gen­er­ally un­af­fected by the 50 per cent tax band and don’t have a port­fo­lio of prop­er­ties.

As for house prices, I be­lieve they will stay level this year.” Ste­wart Charnock-Bates, of Charnock Bates, Calderdale. “My im­me­di­ate re­ac­tion to the Gen­eral Elec­tion re­sult is one of great de­light as the re­sult has meant that Home In­for­ma­tion Packs have been sus­pended im­me­di­ately. This means it is busi­ness as usual with re­gards to the speed of plac­ing a prop­erty on the mar­ket for sale with lit­tle ex­tra cost, apart from the re­quire­ment of the En­ergy Per­for­mance Cer­tifi­cate.

The re­sult of this has been more prop­er­ties com­ing to the mar­ket which gives buy­ers greater choice.

I sus­pect there will be changes to VAT and cap­i­tal gains tax which may have some im­pact but I am of the opin­ion that the prop­erty mar­ket is now re­silient enough and past the worst in these re­ces­sion­ary times.

Calderdale has re­acted pos­i­tively over the last 12 months to mar­ket im­prove­ments and with im­prov­ing com­mu­ni­ca­tion links and a di­rect rail link to London I can see the area pro­gress­ing even fur­ther in the fu­ture.

I would an­tic­i­pate a sta­ble 12 months as the new Govern­ment im­poses in­evitable tax in­creases and cost cut­ting, but af­ter this I can see steady growth.” Nick Talbot, part­ner at Carter Jonas. “There has been a feel­ing of frus­tra­tion over the last 12 months with a lack of new prop­erty com­ing to the mar­ket. How­ever, this has started to change through­out the re­gion and we have seen a marked in­crease in ac­tiv­ity. This has been helped by the re­cent abo­li­tion of the dreaded HIPs along with mort­gage lend­ing start­ing to ease slightly.

With things now set­tling down post-elec­tion, fo­cus has turned to what will hap­pen in the forth­com­ing Bud­get, in par­tic­u­lar cap­i­tal gains tax, VAT and in­ter­est rates in the longer term. On a pos­i­tive note, the re­cent stamp duty hol­i­day for first-time buy­ers look­ing up to £250,000 and the in­crease in the top rate to five per cent from April 2011 could en­cour­age both first-time buy­ers and buy­ers to­wards the top end of the mar­ket to take ad­van­tage of these changes, par­tic­u­larly to­wards the end of this year.

The in­crease in prop­erty be­com­ing avail­able has helped to re­lieve up­ward pres­sure on prices and we would ex­pect these to re­main sta­ble for at least the rest of this year.” An­drew Wells, of prop­erty auc­tion­eers and val­uers All­sop. “Look­ing at it na­tion­ally rather than re­gion­ally, much of the re­cov­ery has been driven by London and the South-East. The buoy­ant London mar­ket has in­evitably tended to dis­tort me­dia cov­er­age and to a lesser de­gree the Hal­i­fax and Na­tion­wide house price in­dices. Here in York­shire, while it’s fair to say there is a good mar­ket for some types of prop­erty and lo­ca­tion, there are many wouldbe sell­ers who are still find­ing it dif­fi­cult to en­tice buy­ers and there is lit­tle in the way of com­pe­ti­tion for pur­chase.

Prop­er­ties most in de­mand are qual­ity fam­ily homes in com­mutable lo­ca­tions. Most dif­fi­cult to sell are tra­di­tional ter­raced houses. With con­tin­ued dif­fi­culty for first-time buy­ers ac­cess­ing rea­son­able mort­gage terms, it is the bot­tom end of the mar­ket that is slow­est. It is en­cour­ag­ing to see that house­builders are buy­ing land again – al­ways a good sign that con­fi­dence is re­turn­ing. Land prices have ad­justed to af­ford­able lev­els and many lo­cal au­thor­i­ties have mod­er­ated their de­mands for af­ford­able hous­ing, fi­nan­cial con­tri­bu­tions and other good­ies. How­ever, banks are still far from en­thu­si­as­tic about lend­ing to the devel­op­ment sec­tor and this will con­strain new home sup­ply for the fore­see­able fu­ture.

Our May auc­tion did see some last-minute en­tries from buy-to­let in­vestors keen to off­load be­fore any CGT changes come into ef­fect and en­quiries for July auc­tion en­try are very busy. We are not see­ing much of an in­crease in sell­ing ac­tiv­ity here – pri­mar­ily be­cause ten­ant de­mand is strong and land­lords are con­tent to col­lect rent. The irony is that the grow­ing ten­ant pool sup­port­ing this in­vest­ment sec­tor com­prises mostly the would-be first-time buy­ers who are ab­sent from the sales mar­ket.” Kevin Hollinrake, of Hunters es­tate agents. “World Cups and Gen­eral Elec­tions are never good for the hous­ing mar­ket so we were ex­pect­ing a quiet mar­ket in the first half of 2010 and so it has turned out. In­struc­tions have been good, 50 per cent higher than the same pe­riod last year, but sales have been more dif­fi­cult with vol­umes on a par with 2009.

The biggest is­sue we have is the mis­match be­tween seller and buyer ex­pec­ta­tions on price. A good house, well priced will al­ways sell well in all parts of the mar­ket and wise sell­ers are be­ing more re­al­is­tic about the mar­ket and hence their ask­ing price.

We have def­i­nitely seen re­newed con­fi­dence and in­creased ac­tiv­ity since the coali­tion was formed and we ex­pect that to con­tinue. The banks seem to be grad­u­ally be­com­ing less tight-fisted with their lend­ing which has been the pri­mary is­sue all along.

Let’s hope things con­tinue in the same vein and then start to gain mo­men­tum af­ter Rooney scores the win­ner against Brazil in the fi­nal.” Jonathan Mor­gan, of Mor­gans City Liv­ing, Leeds. “While most peo­ple would hate to ad­mit that a triv­ial, ex­ter­nal event such as a Gen­eral Elec­tion might af­fect their de­ci­sion­mak­ing process, there is lit­tle doubt that an ir­ra­tional fear of the un­known did hold some peo­ple back from the prop­erty mar­ket. The full im­pact of a change of govern­ment will only un­ravel af­ter the emer­gency Bud­get on June 22 when rad­i­cal changes to tax regimes are likely.

Talk of a big in­crease in cap­i­tal gains tax is on the cards. Fears of a mass prop­erty sell-off in re­ac­tion to this spec­tre were wildly re­ported, but it makes no sense to most in­vestors to dis­pose of an as­set which is more likely than not well rented, in a mar­ket where a ready buyer is un­likely, purely to mit­i­gate a po­ten­tial fu­ture tax po­si­tion.

It is more likely that prop­erty in­vestors will con­tinue to man­age their in­vest­ments with a medium term per­spec­tive, take good in­come while it is avail­able and plan their exit from the mar­ket ac­cord­ing to their own cir­cum­stances.

Post-elec­tion, the city cen­tre mar­ket looks pretty much as it did be­fore hand. Rentals pre­dom­i­nate with stock in very short sup­ply. With very few new apart­ments com­ing to the mar­ket, de­mand is be­gin­ning to ex­ceed sup­ply and we are see­ing mod­est rental growth as a con­se­quence. New sales are in line with 2009 – flat – and this will re­main the case un­til such time as un­founded claims of over-sup­ply fi­nally fade away, and mort­gage avail­abil­ity in­creases dra­mat­i­cally.

Oc­cu­pancy lev­els are, we es­ti­mate, at record lev­els, with around 95 per cent of the avail­able apart­ments cur­rently oc­cu­pied.”

Ben Prid­den, of Sav­ills, York. “The elec­tion re­ally has not af­fected our mar­kets specif­i­cally yet. May was a strong month, the York of­fice agreed the sale of 10 houses. The Bud­get is of far more rel­e­vance and changes re­gard­ing cap­i­tal gains tax (CGT) will af­fect many clients,

The mar­ket is get­ting po­larised be­tween good houses and those just missing the mark. Blue chip stock is, in some cases, sell­ing for 2007 prices. I have noted a par­tic­u­lar hunger for houses to the north of York in the Howar­dian Hills and near Am­ple­forth. In re­cent weeks, we have had two in­stances of com­pet­i­tive bid­ding. My pre­dic­tion is that mo­men­tum will carry into the early au­tumn, be­yond that, things may be­come a lit­tle tougher.” Pa­trick McCutcheon, head of res­i­den­tial at Dacre, Son and Hart­ley. “I think an air of cau­tion re­mains. The Govern­ment is paint­ing a dark pic­ture of what is to come in the Bud­get, and one can only hope that this is down a de­gree of po­lit­i­cal pos­tur­ing and the re­al­ity wont be as bad as some fear. Some buy­ers are now sit­ting on their hands pend­ing the June 22 – con­versely, oth­ers are hap­pily buy­ing, es­pe­cially in the up­per sec­tors.

Prices re­main steady. So far as cap­i­tal gains tax is concerned, I do not see this as hav­ing a ma­jor ef­fect; there are some who say that any in­crease will lead to a flood of hol­i­day homes com­ing to the mar­ket – I just don’t see that. Own­ers will re­tain and deal with the li­a­bil­ity at the time of nat­u­ral dis­posal. House prices will re­main static for the short term.” Tim War­ing, head of res­i­den­tial for Knight Frank in the North. “‘In­ter­est­ing’ is pos­si­bly the best def­i­ni­tion of the cur­rent mar­ket place. It would ap­pear some po­ten­tial pur­chasers are hold­ing back from mak­ing a com­mit­ment, per­haps wait­ing to see how the econ­omy per­forms in the light of the forth­com­ing emer­gency Bud­get.

That said, sales are hap­pen­ing where buy­ers, sell­ers and val­uers are all tak­ing a prag­matic and sen­si­ble po­si­tion on what a prop­erty is worth. Talk of a dou­ble dip is not help­ing gen­eral con­fi­dence but then we have pur­chasers who are frus­trated that they can­not find the right house to buy. The sus­pen­sion of Home In­for­ma­tion Packs is al­ready lead­ing to an in­crease in the num­ber of houses com­ing to the mar­ket. How­ever, re­al­is­tic pric­ing re­mains es­sen­tial if the mar­ket­place is to con­tinue to func­tion.”

THE AX­E­MEN: Prime Min­is­ter David Cameron and Trea­sury Chief Sec­re­tary Danny Alexan­der set out the aus­ter­ity agenda.

From left, An­drew Wells of Al­sop, Kevin Hollinrake of Hunters, Jonathan Mor­gan, Pa­trick McCutcheon of Dacre, Son and Hart­ley and Tim War­ing of Knight Frank.

From left, Martin El­lis of Hal­i­fax, An­drew Bead­nall, Ste­wart Charnock-Bates, and Nick Talbot of Carter Jonas.

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