After the General Election: What now for the housing market?
Now that the dust has settled on the General Election campaign and newly-appointed Conservative ministers are settling into their roles, what should home buyers expect from the new regime?
Well, firstly, house prices could be on the rise as cautious vendors and buyers who held off in the run-up to the election now feel more financially secure and enter the market.
According to latest Office for National Statistics data, house prices rose by 6.5% compared to levels before the financial crisis, although prices in the North East actually went down by 5.6%.
But analysts are now predicting growth in house prices across the board, particularly at the top-end of the market, as confidence returns. Estate agent Savills is anticipating a 19.3% growth in prices over the next five years with momentum returning to the market. A combination of economic confidence, growing employment and low mortgage rates mean many people are choosing now as the time to buy. Sales and purchases at the upper echelons of the market have been particularly buoyant now that fears over a mansion tax have been lifted.
Those looking to invest in buy-to-let properties are also ready to act now, having delayed any purchase because of Labour plans to regulate landlords by capping rent rises at the same level as inflation.
For purchasers, Help to Buy schemes will continue to run and develop, helping first-time buyers step onto the property ladder. But, Conservative policies go beyond that, promising to bring more properties onto the market.
We may, however, be in for a long wait until the promise to extend the Right to Buy scheme to more housing association tenants becomes a reality. The plan is designed to provide a more affordable route to home ownership for social housing tenants by offering higher discounts than those currently on the table.
Tenants will be able to apply once they have rented their housing association property for three years, benefiting from capped discounts of up to 50%.
Another promise is to provide 200,000 new homes for purchasers under 40 at a 20% discount under the Starter Home Scheme, although buyers will have to repay this advantage if they sell within the first five years.
But, even if those new properties do come onto the market, the imbalance between supply and demand still exists, keeping prices out of reach for many.
For those who already have a foothold in the property market, the new policies wont hold a great deal of interest. But existing homeowners may want to think about moving to a new mortgage deal. A shift upwards for interest rates is expected by most analysts in the first quarter of 2016, so opting for a fixed rate deal is an option to consider. Earlier reforms to implement stamp duty along the same lines as income tax have also helped to make climbing the ladder to buy your second or third home more affordable.
First-time buyers will want to think about whether it really is worth waiting for new Government policies to become a reality before they take the plunge. It may be that favourable mortgage terms and house prices which have not yet started to increase too much make a move now, for those with the luxury of having already saved a deposit, a more financially sensible option.
Please note: This article is intended as guidance only and does not constitute advice, financial or otherwise. No responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by Latimer Hinks.
Martin Williamson is Head of Residential Property at Latimer Hinks Solicitors in Darlington. Latimer Hinks has a team of around 40 people serving private and corporate clients. For further information: www.latimerhinks.co.uk or call 01325 341500