Home in on big housing boom
JOHN Halman is managing director of Gascoigne Halman, an estate agent with 18 offices in south Manchester, and is the North West regional residential spokesman for the Royal Institution of Chartered Surveyors. Here he discusses the implications last week’s general election is likely to have on the property market. Guided by the national opinion polls I had prepared for this review of the housing market in the anticipation of a hung parliament, with the distinct possibility of a mansion tax together with new draconian rules for the private rental sector.
Instead, the election produced a result that surprised even a recuperating Nick Robinson, with David Cameron being returned to No.10.
Is this likely to affect the property market in our region and, if so, in what way? In the run-up to the election all of our offices in south Manchester and north Cheshire have reported high levels of viewers and strong sales.
This activity is a result of the relatively high level of prosperity in our immediate region and the attractive rates of interest being offered on mortgages. Further confidence has also been provided by base rates which are anticipated to remain at the current level of 0.5 per cent for at least the remainder of this year.
Many people think that now is a good time to buy and this has been reflected in high levels of activity and sale prices which have been rising in all of the more popular areas for properties in lower and mid-price bands.
At least part of this activity has been stimulated by the buy-to-let market with rents rising. Yields of five per cent are not uncommon, and when linked to capital appreciation this has produced an understandable increase in activity with landlords extending their portfolios.
The one area of the market, however, that has not experienced high levels of activity is the mid to higher market. The price level at which this kicks in differs from local market to local market – but nevertheless there has been a profound effect on this market by the promise of a mansion tax by both the Labour and Liberal Democrat parties.
This has dampened demand and brought a cautious approach from purchasers fearing a bigger house will significantly increase their personal tax burden.
This election removes that risk and we believe will result in greater levels of activity in the mid to higher market over the course of the next parliament. This will come as a welcome relief to many parts of our region. While the private sector rental market is likely to continue to be active, we would encourage the Government to look carefully at the controls in this sector where greater protection is required for landlords and tenants.
We, like the majority of our reputable competitors, have professional bodies with rules that ensure we adhere to strict guidelines relating to clients’ money, but the same cannot be said for the industry as a whole and there continues to be stories of abuse up and down the country.
Prior to the election each of the political parties made significant promises relating to the number of new house starts that would take place if they were in Government.
The one common denominator of all of these statements was that they were wildly higher than has been achieved during the last decade and we question whether, with the current planning policy framework, we can ever build sufficient houses to satisfy our growing population. In these circumstances demand outstrips supply both in the rental sector and also in the house sales market with the inevitable consequence of increased prices and increased rents. Without a significant increase in the housing supply we can only see an extension of this trend over the next few years.