Tonight we’ll witness the most significant debate yet between the UK’s largest political parties with the May 7th General Election fast approaching. But what affect will the looming general election have on the residential housing market in the UK?
Traditionally the housing market would pause in the run up to the general election and decisions to buy or sell were sometimes dependent on who would come to power.
The economic environment currently is most favourable to house purchaser. We sit in a low interest rate environment which does not look like changing soon and we have a significant supply demand imbalance.
The property manifestos of the main political parties do not have significant differences. Although labour wishes to help the lower end of the market as is traditionally their position.
T he UK buyer is wealthier than ever and overseas investors are looking to buy up to the £2million mark. Demand at the top end of the market has waned of late as the changes to the stamp duty thresholds kick in.
Despite the above, there is still a definite ‘wait and see’ attitude in the market. The underlying demand will remain, whoever holds the keys to number 10 Downing Street. Transactions will slow down and mortgage approvals will fall, but the underlying valuations will not change. Rightmove suggests that average prices across the UK in 2015 will rise by a sustainable 4.8%.
What may change however is the residential investment market. Popular areas such as Manchester regularly figure in the UK’s top locations to invest and indeed almost 1 in 4 properties in Manchester are purchased with investment in mind.
Dependent on the election results, the rental market could see some changes. The Conservatives are in favour of a light touch approach to regulating Landlords. If the current pension changes come into effect, the residential property market will see a boom in those wishing to invest their pensions in vehicles that should offer capital growth and the flexibility of a regular rental income.
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