How do you think a coalition Government is likely to affect the property market?
A good question. Basically, everything depends on sentiment; on confidence, or the lack of it. And, as far as the broader economic situation is concerned, this is - as always - very much in the lap of the gods (although unfortunately, they happen to be Greek gods on this occasion…) Nevertheless, the initial reaction by the financial markets to the election of Britain’s first coalition Government since the last war has been broadly positive.
In the longer run, what will matter most is the way the new Government tackles the enormous public sector deficit. And here too they seem to be making the right noises. Mervyn King, Governor of the Bank of England, and the man ultimately responsible for setting interest rates, has already voiced his general approval of the plans that have so far been announced, although everyone concedes that there is a lot more to do.
As for those issues more specifically related to the housing market, such as the future of Home Information Packs and reform of the Stamp Duty regime, neither appears to be considered important enough to be slated for early implementation. Interestingly, at the time of writing, the former shadow housing spokesman, Grant Shapps, has just been confirmed in the role of Housing Minister. However – unlike his numerous Labour predecessors – he will not have a seat in the Cabinet.
Nevertheless, when all’s said and done, the fact remains that the UK property market has proved itself pretty resilient up to now, in the face of what was widely regarded as the worse recession since the 1930's. Only 18 months ago, there were predictions that prices could decline by anything up to 30% from their 2007 peak, whereas in fact they are currently rising at 10% year on year, and are already nearly back to where they were at their height.
In Britain, the property market has its own built-in dynamic, with death, divorce, and growing and contracting family sizes all having an impact. It’s not just about economics. Nor is a little thing like a coalition Government likely to have any impact on the long-term stability of the market. Just ask all the wealthy Greeks who are apparently flocking to London to buy property in order to safeguard their money!