After an election where housing was one of the main issues discussed, the dust is settling, and we are beginning to see what is likely to happen in terms of housing policy and its consequent effect on the housing market in general.
It is important to make sure all your staff are well informed about the issues around housing in general, as one of the key factors that builds trust and influences people to use a particular estate agent is a tone of authority underpinned by knowledge. No potential customer who asks the question “What do you think will happen to the housing market now the election is over?” wants to receive the reply “Who knows, your guess is as good as mine!”
The first factor which may influence the housing market is the removal of doubt about the result has now gone. It is clear we are going to have a one party majority government for the foreseeable future and we can already see in some areas this is resulting in the prospect of the second half of the year being busier than the first, with more people deciding that now may be the time to move…especially those people who want to move to a larger property in the near future.
We have already seen a big increase in activity in central London and the top end of the market due to the removal of the fear of the mansion tax and higher rates of taxation on top earners. This of course is underpinned by a shortage of supply which looks set to continue apart from high end new developments.
But the ripple effect seems to be hitting the towns just outside the M25 and in more affluent suburbs across the UK, as people start to think that “prices are unlikely now to fall and are more likely to rise” – one report stating “up to 25% in the next 5 years”. Some bookies are even saying the average UK prices will rise to over &200,000 this year. This should certainly be the “disturbing” information we should be using to encourage potential vendors and buyers to act now, in our “post-election” calls and conversations.
We should also be aware that Investors, and particularly those with pension savings to invest, should be a particular group of people who should now be confident to buy properties with high capital growth potential.
Immediately after the election, commentators believed that a Conservative victory meant lettings legislation and regulation was not likely to happen. However in the last couple of weeks it appears that the government is looking at a registration scheme for landlords (as is in place in Scotland already) or at least for all HMO properties, as part of their range of actions to clamp down on illegal immigration and renting properties to these people, with a roll out of the Right to Rent scheme nationwide. It has not yet been confirmed how this scheme may operate and if it will be restricted to certain authorities or types of properties or rolled out across the country. It may well lead to a redefinition of an HMO. But it is certainly a surprise to many lettings agents that this idea is still alive, given the complexion of the government, who tend to advocate a less regulated approach to markets.
One thing that is clear is that for at least 5 years there will still be a lack of properties to buy although the extension of right to buy for Housing Association tenants may have a small impact on transactions over a longer period.
In reality a lack of supply in markets can only mean one thing…rising prices. It now seems unlikely that housing starts will rise anywhere near the 300,000 required to keep pace with population growth, and to compensate for the lack of building over the last 20 years. Although the government intends to sell properties at a 20% discount to first time buyers under 40, the number of properties mentioned is only 40,000 a year.
Thus we need to make sure that all staff are informing potential clients that they have a short window of opportunity to act now if they wish to move themselves or invest in property for other reasons. Remember it is only when a customer’s emotions are engaged, be they fear or desire, that customers act. It is our job to use our authoritative tone and knowledge to generate business and activity during this post-election window of opportunity.