What's next for the housing market?
Jason Harris-Cohen, director of Open Property Group shares his views on economic and political risks for the housing market.
Firstly our opinion is that the market has stagnated, with typical asking prices above at least 5% above actual selling prices. However in some regions this spread can be 15% plus.
The estate agency market is now so competitive that the agents have to suggest excessive valuation estimates in order to win business and please the homeowner.
I believe that the housing shortage is strongly concentrated to London and the southeast, and this is compounded by the fact that transaction costs have soured including solicitors fees, estate agents commission, VAT, stamp duty and removal companies.
As a company our typical house sale transaction takes 6 months, and over 35 percent of sales that we agree fall through for various reasons. Mainly that the buyer tries to secure the property at the highest price and then knocks us down, or complains after a home buyers survey picking out negligible points which one would find if surveying 90% of properties in the United Kingdom.
On another matter, the election is looming and pundits agree that it’s one of the most unpredictable for 100 years.
Labour plans to end the non-dom tax regime, and impose new rules on landlords which could affect buy to let landlords and prompt them to sell with sitting tenants, or once empty.
Successive governments will lay down rules to increase the energy efficiency of homes, and this will mean that landlords may need make investments in their homes in order to Comply with new regulations. You can read more about this on our blog here: Trouble-for-landlords
Moreover labour wants to cap rent increases which would be set based on "market value of homes' and rent reviews could take place no more than one a year. These policies could have a significant effect on the buy to let sector and investor demand.
Figures this week from the office for national statistics showed the annual rate of house price inflation falling, and other leading thinktanks predicts a fall in London prices of over 3.5% in 2015, against a small rise nationally after years on over-performance in London.
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