Posts with tag: property market recovery

Will the Government Boost the Property Market?

Published On: July 13, 2015 at 3:02 pm


Categories: Landlord News

Tags: ,,,

The general election is firmly behind us, but it is still unknown whether the Conservative Government will boost the property market.

In the past, it has been found that under a Conservative MP, house prices grow at a faster rate than other party constituencies. proved this in 2010, when they conducted research on the matter.

Will the Government Boost the Property Market?

Will the Government Boost the Property Market?

However, it is thought that this is inevitable, as property prices and wealth are connected; wealthier areas are more likely to have a Conservative MP.

Further research by eMoov indicated that house prices increase faster under the Conservatives. Considering this, alongside the fact that the market is recovering from the recession and initiatives are in place to support people buying homes, it is expected that property prices will rise over the next five years.

Although, it is important to remember that since the recession, house prices are changing very differently depending on the property type and the area it is in.

For instance, in the prime market – properties costing millions of pounds – activity dropped before the election due to the threat of a mansion tax. Now that this is no longer lingering, buyers and vendors can relax, fuelling a prosperous market.

However, it is not clear that prices will rise as quickly as they have done in the past in any market, and under any Government.

In the past few years, property prices have been reported as increasing, but have only been rising after large decreases when the recession hit. Areas such as Wimbledon experienced falls of 15% during this period. Northern Ireland saw huge declines of 47%.

Since the crash, areas are fitting into three categories: Places like London have seen prices recovering beyond the highs recorded before the recession; prices have started to recover in some areas, like the East Midlands, but are not back at their peak; or they are not experiencing any increases, such as Liverpool and Bradford.

Additionally, in comparing recovery statistics this time around to data from the last recovery after the 1990s, property price growth has not been as strong as previous years, even in wealthy areas.

The London housing market is still steady, but price rises have slowed, to a current 9% year-on-year. This is due to some areas seeing no growth but others experiencing stable increases.

Furthermore, new measures have been put in place regarding lending and this is impacting demand. Banks are now restricted to lending 4.5 times a borrower’s wage and the Mortgage Market Review (MMR) placed tougher lending criteria on banks. Less people can therefore afford to buy a new house.

As long as the economy continues to recover, property prices will likely grow, if steadily. However, the growth of the past may not be repeated in the future.


One Million People will Move Home this Year

Published On: March 18, 2014 at 4:20 pm


Categories: Finance News

Tags: ,

During 2013, around one million people are expected to move house due to an improving property market, it was recently announced.

The Ernst & Young ITEM Club have used the Treasury’s economic models to predict that the amount of housing transactions will increase by 7.5% this year. They have also referred to Chancellor Osborne’s plans to guarantee £130 billion of mortgages leading to housing transactions rising by another 7.8% next year.

One Million People will Move Home this Year

One Million People will Move Home this Year

The chief economic advisor to the ITEM Club, Peter Spencer, has discussed the predictions. He says: “With export markets continuing to disappoint, the Chancellor has focused his firepower on the home front. And the timing couldn’t have been better. Real incomes are already starting to recover, mortgages are becoming more readily available, and homes are more affordable, as the house-price-to-earnings ratio continues to fall. Although it’s not a long-term strategy, stimulating the housing market and the high street will keep GDP growth positive. Unbalanced growth is better than no growth.”

The Government’s new Funding for Lending Scheme (FLS) will allegedly lead to more people being able to buy a property, as it will decrease costs of mortgages, according to the Club. They have also supported the controversial Help to Buy scheme.

Spencer explains: “We expect [the scheme] to boost the number of housing transactions, particularly at the lower end of the market where the deposit and low equity have been a major constraint.

“We should start to feel slightly better off this year, which will help to loosen the purse strings. Consumer spending added 0.7 percentage points to GDP in 2012, and the Chancellor’s budget will help ensure the tills continue to ring for some time yet. Consumers have been burnt by the experience of the recession, and are much more cautious with their finances. Households are likely to continue paying down debt rather than racking up huge credit card bills.”1

Progresses in the property market will also benefit landlords, as there will be less pressure on the private rented sector.

Additionally, should the property market become steadier there is the chance of landlord insurance policies becoming cheaper, as there would be less risk of tenants falling into rent arrears.

The next few months will uncover whether the ITEM Club’s forecasts are accurate, and whether the housing market will bounce back to pre-recession status.