The wait is nearly over!  The wave of pre-election speculation and scare mongering is all but spent! 

Whatever the government, the prospects for the property market must be seen in the context of long-term fiscal squeeze (continuing high taxation fuelled by increasing demands for public spending).  However, as long as the economy performs and the imbalance of supply vs demand continues, market activity below £1 million looks set to remain buoyant – although, for the prime market, evidence increasingly points to the need for a price readjustment.

This summer saw a surge in the number of £1 million + properties coming to the market (and an even greater number of price reductions) – yet market activity remained virtually stagnant (notable exceptions being properties in towns with a Grammar or grant-aided school, as the threat of 20% VAT on top of escalating private school fees began to be felt).

Post Election, we forecast the ‘prime’ and ‘super prime’ markets accepting that a ‘re-valuation’ is well overdue.  Our records show that, so far this year, for properties in excess of £1.5 million as few as 12% actually sold and we believe that asking prices remain stubbornly 10% – 20% overly optimistic (our recommendation to our clients is to wait to see what sort of majority Starmer will gain and his new Chancellor’s Autumn statement – as this will dictate the prospects for further fiscal tightening). Much as house owners have been hoping for price increases continuing from 2021’s ‘Boris’s bounce’, they ignore the combined impacts of rising borrowing rates, inflating running costs (everything from energy to maintenance costs to insurance premiums) and, above all, growing uncertainty as to what the future will bring….  

Otherwise, like the City, we remain quietly optimistic for the medium to longer term.  We tend to disbelieve the scare stories of impending dramatic increases in Inheritance and Capital Gains taxation (‘fiscal drag’ will bring an increasing number of estates into their IHT net anyway) and, given the cost and complexity of imposing a ‘wealth tax’, we tend to believe that Councils will be allowed to impose a new ‘J’  band for Council Tax (for houses with a notional 1991 value in excess of, say, £500,000)…..   

Previous Labour administrations have shown a reliance on one’s home as being both the best hedge against inflation and one of the most tax-efficient of investments (even Starmer’s quest for new ways to raise money being unlikely to remove the tax exemption for one’s principal dwelling).

We will have to wait to see what effect the imposition of VAT on school fees will have on demand (in our view, likely to manifest itself by reducing buyer’s purchasing budgets) and – for areas threatened by urban sprawl – Sir Keir’s promised shake up of the Planning system so as to stoke his new wave of house building.  In the meantime, we foresee markets embracing the new wave of confidence that any new government brings and a general determination to simply get on with our lives…..