Hats off to journalist, Matthew Parris, who called the result back in March by the way. Few others could see beyond what the opinion polls were telling us which was a Coalition of...well, perm two/three/four parties from everyone who might secure a seat at Westminster.
In the end, nothing could have been further from the truth and the exit poll issued at 10pm to general bemusement, turned out to be right on the money. As has been the case in far too many Elections, the polls seriously under-estimated the Tory share of the vote/over-estimated Labour’s and while we could never say it was a landslide, even a very slim majority felt like a major drubbing given it was supposed to be a very even contest.
Now that the dust is beginning to settle and we have five years of Conservative Government to come, the focus is turning to what policies will be introduced and how, in particular, the housing market will fare during that time period. I suspect that many property market stakeholders - perhaps agents more than most – breathed a collective sigh of relief as the results started to roll in, during the early hours of Friday the 8th.
The Conservatives, with some notable exceptions, essentially promised an ‘as you are’ approach to the housing market which meant certainly no Mansion Tax for higher-priced properties, no ban on letting agent fees, no introduction of rent controls or long-term tenancy agreements. Instead, it suggested that the policies it introduced during the last Parliament were enough which were the Help to Buy scheme, the announced introduction of the Help to Buy ISA, changes to the stamp duty system, plus a concerted effort to get house builders building again.
For the housing market, the key issue for the next five years will be supply – it will be about getting somewhere close to the estimated 250,000 new properties we need each and every year if we are to close the ‘housing gap’. The Tories have pledged to build 200,000 new starter homes by 2020 plus 400,000 new homes to be accessed by those under 40. I suspect there will need to a much greater focus on freeing up brownfield sites in order to achieve this, plus perhaps more garden cities, and some sizeable incentives to house-builders themselves who have already come out and say that 250,000 new homes will not be achievable.
So, what will agencies make of the result? As stated above, I suspect they will be happy particularly if they are operating in the high-end property market. The Mansion Tax would have had a serious impact on properties in and around £2m simply because it would change valuation levels and behaviour. Intervention in the property market is inevitable but this would have fundamentally changed the rules of the game for these properties and those buying/selling them.
Without a Mansion Tax to worry about I suspect we will see a growing amount of activity in this area, indeed, it appears that foreign investors in London have already hit the green light following the Conservative win. For other parts of the market, activity should improve after a relatively slow start to the year – to be fair demand hasn’t tended to be the issue but there were those waiting for the Election to be over before they made their moves. With this now done and dusted that activity can take place. Therefore, it’s difficult to see anything but a strong end of Spring/Summer period – provided of course that we can maintain a good supply of properties.
And once again we’re back to supply. With mortgage lenders showing continued appetite to lend and house prices remaining on the upward curve, there seems to be little doubt that purchase demand will continue to be positive. If we can develop a more matched scenario with supply then we will improve the situation still further – of course people will always need to sell regardless of the market, but perhaps with house price levels pushing back up we may be able to tempt more potential vendors to take advantage.
As I say, it promises to be an interesting quarter three and (I anticipate) quarter four as well. The good news is that we have political certainty and this should engender further confidence about the future. As a market we like confidence and therefore I am pretty optimistic about what comes next – let’s hope this new Government can help push us on to greater heights.
