With the General Election only days away as I write and with the shortest odds being on no party having a clear majority, there is clearly a degree of uncertainty about the future direction of the country and the impact of this is that it creates a housing market that stutters and sees decision making falter.
The possibility of a “hung Parliament” also means that the more extreme policies promised by the parties will invariably get eroded in any negotiations between coalition partners looking to get into bed with each other.
Fundamentally the market remains strong and the outlook is good. Interest rates are low and falling. Five year fixed rate mortgages are now available at interest rates below 2% and, with inflation low and economic growth continuing, the outlook for the sales market is strong.
Supply is falling short of demand and there is a need for greater volumes of housebuilding but no Government will be able to flick a switch and turn this around quickly.
This is likely to see house prices continue gently upwards, held back by affordability issues rather than levels of raw demand.
The private rental sector could see a shake up if the plans of the various socialist parties become reality. Ideas such as no tenant fees, longer tenancies and rent controls may, at face value, appeal to those seeking accommodation but could, if simply introduced on a broad brush basis, due to their potentially negative impact on landlords, result in reduced levels of supply and therefore an artificially induced increase in rental values.
Again, any changes will not happen overnight and should be introduced alongside a programme of housebuilding in both the private and social sectors.
We have seen very little let up in activity leading into this election and are confident that anyone thinking of committing to a sale or purchase, letting or renting, are able to do so with a degree of confidence in their actions.
June’s update will, of course, be able to reflect on the outcome of the General Election and hopefully make some sense of the likely way forward.
