High end housing demand 'to rise' post-election
05-09-2015
Estate agents are forecasting a surge of demand for Britain's most expensive homes following a Conservative victory, although they do not foresee as much of a post-poll bounce for the rest of the market.
Savills, which makes more money when prime property prices are high, predicts that now the prospect of a Labour government that had threatened a mansion tax is once again far off, spigots of deferred demand will open to unleash money into expensive bricks and mortar.
Its views were echoed by estate agent Countrywide, which said in a statement:
We now expect there to be greater activity in the housing market, especially in the £2 million plus markets facing the prospect of a Mansion Tax.
Unfortunately for the 99 per cent, however, Savills believes the election result will have little impact on average house prices, particularly in London. This follows a multi-year rally, which could ease as housebuilders increase the supply of new dwellings and the prospect of an interest rate rise from ultra-low levels looms.
Lucian Cook, Savills' UK head of residential research, wrote in a statement:
With an effective Conservative majority, or Conservative-led coalition now looking like the most likely result, we expect much of the deferred demand from the pre-election period to flow back into the prime market over the remainder of 2015 and 2016, particularly given that the spectre of a mansion tax is now removed from the market.
Mr Cook also forecast that, with prime London real estate having become expensive, it was time for the best properties in markets outside the capital to catch up.
He wrote:
Prime London markets were looking much more fully priced than those in and beyond the commuter zone, and will have to operate in a relatively high tax environment given stamp duty increases imposed in December 2014. It is in prime markets outside London where we expect to see the greatest value increase.
Savills forecasts steady price growth totalling 22.7 per cent in prime London over the next five years, and 23.9 per cent across the prime regions.
At the more ordinary end of the housing market, however, Savills says:
constraints on house price growth remain, most notably the ongoing impact of mortgage market regulation and the prospect that interest rates will rise over the medium term.
He added that "political certainty" will ensure that housing supply becomes less constrained, as planning policies put in place prior to the election gain further traction.".
Countrywide also sees a boost to home building, which should prevent mainstream home prices from rising too much. It said:
We anticipate this Conservative led Government to turn its attention from implementing policies that stimulated demand in the housing market to addressing the lack of housing supply.
Savills predicts 19.3 per cent growth in mainstream house prices over the next five years, with only 10 per cent growth in London, which has so far dominated 5 year mainstream forecasts are +19.3 per cent as a UK average and +10.4 per cent in London.
, Elections, UK, Savills, Comment