From Mayfair Realty
In the UK we are only weeks away from a crucial general election. On the 7th May we will know the outcome but it looks neck-and-neck at the moment. Labour (sort of Democrats) have been in power for thirteen years. They are going for an historic fourth term. But the Prime Minister, Gordon Brown, is not as popular as his predecessor, Tony Blair. Labour promises more of the same. The Conservatives (sort of Republicans) need a swing of historic proportions to gain an overall majority in parliament. They promise change. If the leader of the Conservatives, David Cameron, is made Britain’s 53rd prime minister since the role was fully established in 1721, he would, at 43 years, six months and six days, be Britain’s youngest premier since Frederick Jenkinson in 1812. If there is no clear majority the Liberal Democrats (sort of somewhere between the other two) should hold the balance of power. They could, of course, win themselves – but as they haven’t been in government since 1915 that would be a truly historic result.
As far as the real estate market is concerned it should not really make much difference which party is in power. Any administration will have to deal with the serious aftermath of the global credit crunch and recession, together with the UK’s current national debt, running at over £900 billion ($1,521 billion) – or £14,684 ($23,332) for every man woman and child. This will inevitably mean higher taxes and interest rates, a freeze in public sector pay and a lowering in public investment. Strangely none of the political parties vying for power seem to be saying too much about this at the moment.
Life will become harder financially for many over the next few years. This is inescapable. But the UK real estate market should continue to grow, and interest in overseas property – in the doldrums for a while –will grow also. Individuals and families will get on with their lives despite the economic climate. The real estate market, like nature, finds a way. But the next UK government could help to make mortgages easier to obtain by encouraging greater lending by the banks.
Some recent budget moves to help first time buyers could stimulate more market activity. But the UK market has been slowly gaining momentum for sixteen straight months so the tax break may not make that much difference. Buyers at over £1 million ($1.5 million) will see a lift in Stamp Duty – a home purchase tax – from next year so this may encourage more activity in this area – if only to avoid extra tax.
UK residents are resigned to increasing living costs and this will inevitably have some impact on the market. But while the UK has come out of recession later than most of the other leading economies, recent forecasts show that it should grow at a faster rate than the average for the Euro zone giants, Germany, France and Italy in the first half of this year. UK unemployment is lower than anticipated. Real estate agents from across the UK report more interest and activity. Property prices in key areas are rising.
So while it is hard to see how, after the election, any one political party could have any more impact on the real estate market than another, it seems that they don’t really have to as we are doing it for ourselves!
Latest Real Estate Market Comment from Across The Pond
From our real estate partners in London, England – Mayfair International Real Estate
Buy, Hold or Sell?
Just like the stock market there is a right time in the real estate market to buy, hold or sell. But, unlike the stock market, buying real estate is usually allied to selling, so a clear financial advantage is harder to anticipate or achieve. Despite the turbulence of the past year the market now in the UK, against all odds, is rather good for selling. Here’s why.
Figures just out show that the rental market is reaching some sort of equilibrium, with the numbers of available properties having dropped over the past six months or so. This is an important indicator. It suggests that those owners who couldn’t sell their homes in the recession, and were thus letting them instead, have now begun to find buyers. This erosion of inventory in the rental sector indicates a new dynamic in the sales sector.
Just as in the US, over the course of the year, buyers have been snapping up those properties priced keenly to sell. These bargain seekers have, in the main, been cash buyers or those with sufficient funds to require only a small mortgage. Now two things have happened in the market. Cash buyers are drying up along with the bargains. In many areas prices have been rising to reflect the paucity of available stock.
Will more inventory become available over the coming months as home-owners see more chance of a sale? Would a greater supply of property for sale suppress, or even reverse, some surprising price advances of the past few months? These questions are hard to answer in a post recession economic environment that even yet threatens greater job losses and higher taxation.
In the UK, with a general election less than a year away, we are now in an all-important political party conference season. Those of us in the real estate industry and those whose plans include bu
ying and/or selling property over the coming months are busy analysing how the policies of an aspiring new government may affect our real estate market. All the parties have new ideas. But what good, if any, these measures would have in practise is difficult to see just now. But the real drivers of the real estate market are deaths, births, confidence and taxes. Any incoming government next year can’t do too much about the first two. But how they manage the latter pair will be crucial to them and to the population.
So what to do now to make the most of this UK market before the general election next year and even Christmas this year? Why, sell of course. But if there is a property to buy as well it really does not matter too much in the financial scheme of things. What surely does matter is that we and our families are happy and safe in the homes we have or the homes we wish to buy. These are always the best reasons to determine whether to buy, hold or sell and no market or political party, whatever their policies, will ever change that.
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