The fragile recovery of the property market could be threatened if politicians continue to treat housing as a vote winner in the run-up to the General Election, warns Nick Leeming, Chairman of national estate agents Jackson-Stops & Staff, with 44 offices nationwide.
He predicts a nervousness at the beginning of 2015, which will mean a slower start to the market, followed by a lull in April and May around the General Election when many purchasers may delay making decisions.
Nick Leeming said: “The recovery remains fragile in many areas outside London and politicians should guard against alarmist talk. The market for higher valued properties in the country will continue to be impacted by the concerns over the threat of mansion tax and increasing maintenance costs.”
He predicts that the London property market’s influence on the market outside the capital will be more selective. “Some London owners will want to cash in on the value of their properties and move to the country but the majority of these will want to buy around the commuter hubs in the South-east, with good transport links to the capital. The London effect is not as pronounced as in the past as longer working hours and concerns over losing a foothold on the London property market increase.”
From a lower base, country property may see a five per cent rise in average values across the board during 2015, while London will see a more modest growth of nearer 2.5%. As the economy continues to improve, demand in the middle to lower value sectors in the country should increase, although this effect will be less pronounced in the north.
Trends to watch out for in 2015 include a continued expansion of the Private Rented Sector as job mobility, costs of transaction and high property values favour the flexibility and affordability of renting.
“For investors, the long-term outlook is bright for buy-to-let, particularly in and around city locations with good transport links. The demand from Generation Rent will continue to grow for high quality homes.”
Across the 44 Jackson-Stops & Staff offices, the sentiment remains mixed for the remainder of the year.
Quentin Jackson-Stops from Jackson-Stops & Staff, Northampton, comments: “The run up to an election is always a quiet period. That is not to say that prices will fall, but rather they may stagnate to some degree, with fewer deals being done. The spring and summer of 2014 were busy, but this was largely for properties under the £500,000 mark. While there are not that many properties worth over £2m in this area, fears of a Mansion Tax are having a serious effect.”
In the south-west, Michael Clark, from Jackson-Stops & Staff, Exeter office, comments: “There are some reasons for optimism. The perception appears to be that the boom in property values in the London and the Home Counties may have slowed, as a result of which the gap in value between properties in that area and those in Devon are probably, currently, at the greatest they are likely to be for some time to come. Therefore, this would surely be the right time to buy if you are moving from the South East to the West Country. Still roughly 25% of all our buyers through the Exeter office come from London and Home Counties and we should therefore begin to see some effects of this in the coming months.”
James Wilson, from Jackson-Stops & Staff Shaftesbury, comments: “In Dorset, we remain cautiously optimistic – 2014 has been a good year with increasing confidence very noticeable in the early part of the year and the last quarter proving the strongest we have seen since opening in 2004. Despite this, there has been some noticeable weakness in the market for properties over £1 million. Worries about mansion tax, and taxation on high value property are probably going to increase as the General Election draws closer.”
In the Cotswolds, William Leschallas from Jackson-Stops & Staff, Burford, comments: “During the summer the market was bubbling at a level I would not have expected to continue for the rest of the year and it may be that vendors need to drop their prices if they wish to sell before Christmas. However there are still many good buyers in the Cotswolds market and there are still deals to be made in 2014 with offers being received now.”
In the Home Counties, Nick Ferrier, of Jackson-Stops & Staff in Midhurst, said: “The key to a good sale is immaculate presentation and pricing, plus a good agent who is capable of carrying the sale through conveyancing, given tighter lending and a more fragile market.”
Philip Blanchard, of Jackson-Stops & Staff in Winchester, said: “The major concern in Hampshire has been over £2m where very few sales have been conducted. Buyers are extremely concerned about the outcome of next year’s General Election. Will mansion tax actually become a reality? If it does, there will be a huge change in values. I can think of many of our older clients, who are living off small pensions, who bought their houses 20-30 years ago for not a great deal of money, and they are now worth north of £2m.
“If this tax does come in to being then those clients living off pensions will probably have to sell. Most of those houses are never going to make over £2m if they are in the bracket of £2m – £2.25m and some, of course, will become forced sales.
“Consequently, the majority of our sales have been in the bracket up to £2m. The market is extremely price sensitive. Mortgages are difficult to obtain, the banks and building societies are taking months to send out a mortgage offer, therefore sales are taking months to exchange, and we have never had such a high fall through rate.”
In Kent, Alastair Hancock of Jackson-Stops & Staff in Sevenoaks, said: “We have had a strong market in central Sevenoaks in the price range up to £1m, mainly because of a lack of stock. As a commuter destination and the attraction of Sevenoaks School and other high performing schools in the area, continue to attract new residents to the town. However, the market over £2m is mixed, particularly in the areas outside Sevenoaks, reflecting people’s concerns over mansion tax and stamp duty. Some sellers have been over-ambitious on price and are beginning to take more realistic view.”
In East Anglia, Tim Dansie, of Jackson-Stops & Staff in Ipswich, said: “We started to see the long awaited interest coming out of London, with properties in Fulham and Wandsworth selling at close to £3m and translating into quality country properties at over £1m less.
“Autumn began well, with a number of sales agreed in the first week of September. We expect this activity to continue but with a watchful eye on guide prices quoted. Even quality property with too high a price tag is just not being looked at.”