What impact will the election result have on the property market?
Following this month's general election, there looks to be renewed confidence in the property market.
With the Conservatives winning a significant majority in Parliament, there’s currently a feeling of greater political stability and the promise of progress on Brexit. An immediate result of this was that sterling increased by 2% against the US dollar.
What this means is that the property market is currently less appealing to foreign buyers than it was following the referendum – when the falling pound effectively gave an advantage to other currencies.
A new year bounce on the housing market?
After a long period of inactivity on the housing market, estate agents are looking forward to a new year flurry of activity. There’s a feeling that many people who’ve been putting off selling their home, may now feel more confident thanks to less political uncertainty.
“We can expect a market bounce from the get-go in 2020, not only where housing supply is concerned, but with a notable increase in buyer demand levels as well,” says Michael Stone, founder and CEO of new homes specialist Stone Real Estates.
House price rises in 2020?
Property website, Rightmove has said it expects asking prices to rise by 2% in 2020. It’s forecasting a springtime increase in housing market activity.
“The greater certainty afforded by a majority government gives an opportunity for a more active spring moving season, with some release of several years of pent-up demand. There will be regional variations. London is finally showing tentative signs of bottoming out, and we expect a more modest price rise of 1% in all of the southern regions where buyer affordability remains most stretched. In contrast, the largest increases will be in the more northerly regions, repeating the pattern of 2019 with increases in the range of 2% to 4%,” said Rightmove director, Miles Shipside.
Possible stamp duty changes?
During their election campaign, the Conservatives made several pledges regarding stamp duty.
The main promise was to consider increasing the stamp duty threshold to £500,000 from its current level of £125,000. The aim of this would be to make it more affordable to get on, and move up, the property ladder.
Also, the Conservative’s election manifesto mentioned introducing a 3% stamp duty surcharge for overseas buyers. However, they gave no clear indication of when this could potentially be implemented.
Will much needed homes be built?
Underpinning all this is the fact that there’s still a countrywide shortage of homes. The lack of new housing being built, and the UK's diminishing housing stock, will have the biggest long-term impact on house prices.
The Conservatives ambitiously promised one million more new homes would become available in the next five years. They plan to achieve this by sorting out inefficiencies in the planning sector. They’re also considering new ways to support home ownership with the Help to Buy scheme coming to an end in 2023.
Property investors will watch with interest to see if this new government can deliver on its promises.
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