The number of properties coming on to the UK housing market is falling at its fastest rate in a decade as next month’s general election deters sellers.
The economic uncertainty caused by Brexit has undoubtedly affected the market, with house prices falling in some areas and fewer sales having taken place so far this year compared to the same time last year.
Elections normally dampen activity as uncertainty causes a degree of hesitation, but this one is being called to try to break the deadlock after three years of uncertainty. In spite of this, buyers are continuing with their purchasing plans, with the number of sales agreed only marginally down on a year ago.
Many buyers are getting on with their lives and making the most of the better negotiating opportunities that the distractions of electioneering and the seasonal slowdown in the run-up to Christmas can bring. The biggest challenge the London market faces is stock availability and consumer confidence has played a big part in contemplating whether to sell in the current climate.
The impending general election period is just providing more uncertainty and we’re seeing both buyers and sellers put their plans on hold as a result. Rightmove said some would-be sellers of property might be waiting to see if Britain’s next government reforms the stamp duty tax on property transactions which might reduce the cost of acquiring a new home.
Buyers have held back in the hope that prices will fall, but as this hasn’t materialized across the board, they’re starting to come back into the market. The difficulty now is lack of properties for sale, as people are worried they won’t get a good price for their property. This has led to a flurry of activity in some areas during the summer; this will slow down due to the uncertainty of “what happens next?”
However, if you’re considering buying somewhere for the short term it’s more complicated. Transactions are likely to stagnate towards the end of the year unless see some clarity over Brexit. In terms of buy-to-let, demand from landlords has already reduced and many have sold up. We are now seeing rent rises as a result particularly since the tenant fee ban so sadly this has impacted tenants more than agents or landlords. With property deals available and rents on the rise, now isn’t a bad time to be a landlord as long as you really understand your objectives and whether the deal stacks up both now and in the long run.
Brexit is undoubtedly causing uncertainty in the housing market, which in turn affects sentiment and decision-making.
Across the country, average house prices have continued to rise – mainly propelled by regional markets. It is also worth noting that as the pound continues to fall relative to other currencies, it is then more attractive for overseas buyers to invest in UK property, thus buoying demand and helping to keep house prices afloat.
The country is in the midst of a well-documented housing crisis, with demand for houses and flats outstripping supply. While there are numerous ambitious central government plans afoot to increase the country's housing stock, this is a long term project and, in the short term, the shortage of homes will act as a parachute, preventing prices from falling too far before and after the election.
There is a widespread expectation among the housing gurus that pressures on the wider British economy will, during the balance of this year, slightly subdue demand for housing. General Price inflation, a weakening jobs market and near record consumer debt are being forecast. This tends to suggest that, while a house price crash is emphatically not on the agenda, prices are unlikely to grow at such a rapid a pace as we have seen in the past few years.
UK residential property market would be affected by a number of changes that Labour is on record as putting forward for change. Any additional levies here are mainly due to their desire to redistribute income. Again, stamp duty would be an area for re-assessment where the only published aim would be that stamp duty would only remain where the purchasers were for non-domiciled UK residents (non-doms), companies, second homes and investment properties.
In addition, current council tax charges on properties would be replaced with a progressive tax based on the value of the property, which would be payable by the owners instead of those living in the house. Here too, scope for more change has been pledged with higher rates applicable for second homes, those standing empty and for properties that are owned by non-doms and/or non-residents. Last, but not least, another area affecting property would come in the form of a reformed capital gains tax charge that sees rates for second homes/investment properties aligned with income tax rates as a starting point, as well as the removal of principal private residence relief.
A lower number of sales can indicate market uncertainty, which is often triggered by events such as an election or referendum. Many people are waiting until they know more about whether the UK will leave with a deal, but it’s tough putting your life on hold for an unknown.
With each of the major political parties taking a different line on Brexit, it’s impossible to predict the potential knock-on effect for property prices and the sector as a whole in 2020.
It is still too early to predict what impact Brexit will have on property values.
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