With the Conservative Party gaining a majority at the election, we can now consider how the party’s policies will affect the UK housing market.
Greater certainty over the political landscape and economic policy should allow both prime and mainstream markets to naturally pick up some momentum compared to pre-election, resulting in a much more buoyant prime housing market.
Given that the spectre of a mansion tax is now lifted, the prime market can expect much of the deferred demand from the pre-election period to flow back into the market over the remainder of 2015 and 2016.
Restored market confidence aside, we need to reflect on where we were in the cycle prior to the period of pre-election uncertainty. Prime London markets were looking much more fully priced than those in and beyond the commuter zone prior to the election, and will have to operate in a relatively high tax environment given stamp duty increases imposed in December 2014. It is in prime markets outside London – super commuter towns such as Guildford, Sevenoaks and Beaconsfield and lead cities such as Oxford and Cambridge – where we expect to see the greatest value increase.
All of the regions, from the prime suburban towns in striking distance of London to the prime markets of the Midlands and the North, have seen annual price growth. However, there are significant differences in where prices sit relative to their peak in different sectors of the market. This is likely to shape the market over the medium term.
The overall London market is expected to experience a renewed ripple effect into the markets beyond the capital, as those relocating from London find it easier to sell their existing home and take advantage of the price differentials with the rest of the country.