Removal of pre-election jitters good news for buyers and sellers
The Conservative Party’s surprise election win earlier this month is set to take the brakes off the housing market for would-be buyers and sellers, many industry experts have predicted.
Pre-election uncertainty caused an unseasonal drop in the asking prices of homes entering the market in May, with anxiety over the outcome of the vote forcing sellers to value their properties more aggressively, according to property website Rightmove’s latest figures. As a result, the average asking price dropped by £242 to £285,891 throughout England and Wales.
However, now the Tories have confounded expectations and gained a slim majority, a surge of new sellers coming to the market is expected to materialise. Bear in mind that new seller numbers leapt 17% after the 2010 general election, when no one party achieved a majority and there were days of indecision as a coalition government was formed. A similar jump is expected now, surely music to the ears of stock-starved buyers.
Furthermore, the prime market sector has been stimulated by the removal of the threat of one of Labour’s main manifesto pledges – the mansion tax. The potential financial penalties levied on those with properties valued at £2m plus helped slow the market, as people undertook a ‘wait and see approach’. The fact that the mansion tax and measures to limit the number of overseas investors will no longer be implemented has been cited as one of the major reasons for a rebound in activity and prices.
Although pre-election jitters caused asking prices to drop, they only dropped in three out of the ten regions: London (which would have been hardest hit by a mansion tax), the North East and Yorkshire & the Humber.
The anticipated post-election price rise momentum may, however, be tempered by tougher lender criteria and further uncertainty brought about by the upcoming in-out EU referendum. In addition, the new government has to tackle the current housing shortage caused by a huge supply/demand imbalance. They have promised to build 275,000 new affordable homes in the term of the current parliament, with The Royal Institution of Chartered Surveyors (RICS) warning that a failure to bring new stock to the market will push property values up too high.
While sellers will be cheered by average wages rises outstripping Retail Price Index inflation – meaning some buyers will be willing or able to pay higher prices thanks to the more stable political climate and tantalisingly cheap mortgage rates – they should also be aware that they might not necessarily have the upper hand when it comes to negotiation. Buyers could be put in a stronger position by more supply coming to market, thereby increasing their options and giving them more bargaining power.
Evidence suggests there will now be a surge of activity in the immediate months after the election as sellers feel more confident about getting the best possible price for their property – with uncertainty washed away – and buyers eager to act in the late spring market before prices rise again.
If you would like more advice on buying and selling property in Brighton, Hove and the surrounding areas, please get in touch with Mishon Mackay on 01273 821 800. As part of our service we offer an instant online valuation to give you an accurate estimation of your property’s value in the current marketplace.