The property market is forecast to bounce in the New Year as the decisive election result releases some pent-up demand – but sellers have been warned not to get greedy.
Sellers and buyers who have put home moves on ice due to political uncertainty have been tipped to return to the market and deliver a flood of activity after Christmas by estate agents and mortgage brokers.
The large Conservative majority was described as a ‘massive adrenaline shot’ for the property market – with home sales projected to rise – but some agents have cautioned that house prices may not follow suit.
House price rises have slowed in recent years, with London and the South East dragging back the rest of the property market
Property buying agent Henry Pryor said the election result was no magic bullet.
‘There will be a market, you will be able to buy and sell, rent or let, but it won’t be much more exciting than this year’, he said.
‘Indeed I expect that anyone who buys in January will have a property worth up to 5 per cent less by this time next year.’
Meanwhile a leading estate agent warned that sellers expecting to bank big gains after the Conservatives’ large majority delivered a clearer path for Brexit and the economy could be disappointed.
Liam Bailey, global head of research at Knight Frank, said: ‘Supply is likely to rise as political uncertainty recedes and private and public spending stimulate the UK economy.
‘This will put downwards pressure on prices, however some vendors may expect a bounce in prices, which may create a stand-off between buyers and sellers as the market re-prices.’
The property market has stagnated since summer, as properties being put up for sale dwindled and potential buyers stayed away.
A report from the Royal Institution of Chartered Surveyors yesterday, considered a key barometer, showed the housing market in stalemate.
It said demand for homes from new prospective buyers fell for the third month in a row in November, and the number of properties coming to the market remained close to record lows.
Meanwhile, a higher proportion of estate agents saw average house prices fall in November compared to the previous month, although that was mostly because of the continued decline across London, the South East and East Anglia.
Average stock levels on estate agents’ books remain close to record lows, Rics said yesterday
Mr Pryor said: ‘Lots of estate agents, mortgage brokers, lenders and removal firms would love you to think that the election result means a return to the good ol’ days, rising house prices, more sales, bigger loans. I’m not so sure.
‘The housing market still has several icebergs ahead – Christmas, Brexit at the end of January, a Budget in February, snow no doubt in March and the friction of accelerated trade talks through until December.
‘Will prices crash? I don’t think so but most people will be very circumspect about what for most will be their biggest single purchase.
‘There will be some opportunities, however.
‘My advice to anyone looking to move next year is to take your time, don’t rush and try and use the uncertainty to get yourself a great deal on a home you can live in for 10 to 15 years rather than expecting to move on in five.’
Not on the market: The number of homes put up for sale is down 15% compared to last year
Property listing site Rightmove’s most recent report showed the property market has seen the biggest fall in homes being put up for sale since the financial crisis, as sellers stalled in the face of election uncertainty.
The New Year is now forecast to see a reversal of this effect, with sellers potentially pulling forward plans to put their homes up for sale during the traditional busy spring period.
Expect a sharp uplift in transaction levels starting early in 2020
Andrew Montlake, mortgage broker
Andrew Montlake, of mortgage broker Coreco, said: ‘This decisive general election result could deliver a massive adrenaline shot into the UK property market.
‘Expect a sharp uplift in transaction levels starting early in 2020, as buyers and sellers who have played it safe put their plans into motion.
‘Spring for the property market could come early after this comprehensive election victory. There is a huge amount of pent-up demand out there that looks set to be unleashed on the market next year.’
Recent reports have showed house price inflation trailing off.
Britain’s biggest building society Nationwide said that the average house price rose just 0.8 per cent in the year to November to £215,734.
Meanwhile, the most recent report from the ONS / Land Registry report, which lags rivals, showed the average house price up 1.3 per cent in the year to September to £234,000.
Over the past year more expensive property markets in London, the South East and south of the country have fared worse, while cheaper regional cities and the North have tended to do better.
Mortgage rates are near record lows, but buyers in London and the commuter belt are being constrained by high prices and affordability rules that do not allow them to stretch further.
A Budget following Boris Johnson’s election victory is not expected until February and buyers at the top of the market could wait until then to see if stamp duty is cut
One element that could hold back any bounce in more expensive locations is stamp duty and the failure of the Tory manifesto to include a pledge to cut the cost of the tax on buying a home.
There had been rumours that the Conservatives would reduce stamp duty at the top of the market, where buying a £1million home means a £40,000 tax bill, but this was not in their election promises.
Potential buyers may hold fire until after a Budget, expected in early February, to see whether a stamp duty cut arrives then.
Nick Leeming, chairman at estate agent Jackson-Stops, said: ‘In the lead up to Boris being elected Prime Minister, he spoke widely about stamp duty cuts for UK residents, yet this quickly fell by the wayside as he settled in to No.10.
‘Our latest research found that 41 per cent of consumers think there should be a wholesale reduction in stamp duty across all price brackets, while more than a quarter think government should abolish stamp duty on all homes under £500,000.
‘Just 3 per cent felt no change was required, which highlights the need for change.
‘It was therefore disappointing to see the party’s manifesto only focussed on increasing the amount of stamp duty payable for non-UK residents – done in an attempt to take the heat out of the property market.
‘If we are to give the economy the much-needed boost it needs, what we actually need is to reduce the burden of stamp duty across the wider UK housing market.
‘Government wants to see a more fluid property market, which is moving at all levels, then it needs to provide far greater support to key demographics such as first-time buyers, young families and downsizers.’
The Budget may see other policies on housing outlined by the Tories, who promised more homes, to explore longer fixed-rate mortgages and help for first-time buyers in their manifesto but were vague on detail. The government also needs to wean the new build housing market off Help to Buy subsidies.
Mr Pryor said: ‘The Conservative victory is for at least five years, not just for Christmas. The Conservative manifesto was light on any policy details for sorting out the housing crisis, so expect new policies to be made up as they go along.
‘This may include more relaxation of the planning process, some sort of successor to Help to Buy and more of the nation’s silver being sold off on the cheap under Right to Buy.’
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