Adrian Black delivers critical property market insights and the influences, behaviour and money driving them.
First of all a happy and healthy 2016 to all.
Let’s look back a little, to YOUiq Q1 2015 www.youiq.co.uk. We predicted a pretty big slowdown; and we were one of the very few who were right. Perhaps, with our research, we just see, feel and hear it better, or perhaps, as we choose not to pull ourselves in several directions, we are able to offer a more objective view. We have found that by utilising technology, we can deliver a concise visualisation of local property history enabling you to track trends; providing a clear view of the market.
It’s clear that PCL property prices have the politicians' attention. Whether this is due to senior politicians realising that even very high income earners are now finding themselves unable to live centrally, or that there is an increasing issue with empty space due to longstanding and arguably very generous tax breaks for non-dom properties is unclear. The long and the short of it is that the property landscape has changed and we feel the political focus will remain.
In 2016, it is now more expensive to buy property (stamp tax) and for some to own property (ATED). The removal of offshore fund guarantee privileges for onshore mortgages and, in time, for some, increased interest rates and increased tax on sale gains and the removal of tax gain and inheritance tax shelter mechanisms all dampen demand. We have covered much of this material in our blog www.bpblog.co.uk
The 5th of May is a notable date, with housing at the centre of considerations for the leading candidates for London mayor. These candidates will probably consider a void tax in some form (where empty homes are taxed to discourage “buy to leave”) and will probably try to get more homes built; but this is easier said than done. So the main consequence, whatever the outcome, I think will be a reduction on the demand side of the equation rather than an increase on the supply side.
Globally, China and commodity price-driven nations are causing concern and this concern has intensified at the beginning of the year.
Interest rates. We all know that they can only go up, the questions are when and by how much as well as how best to utilise the market before this predicted growth.
On the bright side Sterling has depreciated against the US$ so US$ based buyers now need to spend less of their home currency to buy the same property specification.
So issues remain on balance on the demand side. It’s difficult to put together a case that concludes that PCL property prices will rise in the short term. So the question remains; will they stabilise? In the price range £600k to £1.5m we predict that stabilisation is possible. The stabalisation challenges increase as property prices increase - but there is always a strong background demand for quality. In addition we are confident that we can expect transaction volume to remain low as high prices and increasing transaction costs makes this inevitable and few vendors have to sell.
All this and a potential in/out referendum too. In summary it’s going to continue to be a quiet market and a strongly politically-influenced year.