He says:
“In early 2010, The Government will want to do their utmost to get some feel-good factor into the public psyche prior to the General Election. There will be further pressure exerted on the Banks to increase the amount of residential lending necessary to stimulate the housing market and improve consumer confidence in the economy.
In recent weeks, the Conservative’s lead in the opinion polls has significantly reduced, giving renewed hope to the Government that they might pull off an unlikely victory. They will want to make use of all the tools at their disposal to demonstrate that the economy is finally heading in the right direction.
An increasing number of lenders are coming back to the market with competitive products geared towards the intermediaries, a big shift from the dual-pricing stance of recent years.
This could create the competition needed to stimulate activity in the housing market, which currently suffers from a lack of funding and available stock. In the short-term, this could have a negative effect on house prices with a potential glut of properties, though this could be offset by some vendors hanging on in the anticipation of the Conservatives winning the Election and honouring their pledge to scrap HIPS.
Post Election, if the Conservatives win with a workable majority, then there may well be a “honeymoon period” in the second half of the year with improved public confidence. Scrapping HIPS will see the return of the speculative buyer. However, lenders will need to do more on loan-to-value ratios and increase the availability of buy-to-let products to help the first time buyer and investor landlord.
Whoever wins, the next Government will have to make spending cuts and decisions that will be unpopular. That, combined with the end of the VAT discount, may create a period of uncertainty with consumers. However, with base rates unlikely to rise much above 1.0% in 2010 and with better availability of reasonably priced housing stock, affordability should not be a problem.
There will still be tough trading conditions ahead for the property related professions with firms needing to continue to control costs and run “lean”, but for those that adapt and focus on diversification to maximise their income generation, 2010 could see the start of the recovery to reap the rewards for enduring some of the hardest challenges seen in many years.”
