Market receives boost from Chancellor’s Autumn Statement
As we move towards the end of the year we can reflect on a significantly improved property market in our local area with overall price rises of between 5% and 10%. This compares favourably to the North West generally where, according to the Nationwide and Halifax statistics, properties have risen in value by less than 5%.
This divergence from the figures for the North West is brought about by our local market enjoying higher levels of employment and prosperity than many of the industrial areas which form part of the region. In fact, when comparing the South Manchester/North Cheshire area generally, I often find that my company’s average price exceeds all parts of the country apart from those located in London and the immediately adjoining counties.
It is particularly pleasing that the market has continued to support a high level of sales right into November, a time when things traditionally become quieter. Some correspondents are suggesting that the surge in economic activity is petering out but housing remains a highly sought after commodity and seems to be regarded as a safe haven for people’s savings and pensions.
This confidence has resulted in us seeing a growth in the number of private landlords entering into the Buy to Let market where returns can exceed those found in banks and building societies and where the investment is deemed as safe as houses! Like all investments it is not without an element of risk but anybody who looks back in history will see the long term average is inevitably upward. Rents too have continued to edge upwards as demand outstrips supply.
Of greater interest is what the market will do as we move into 2015. The Chancellor’s surprise announcement in the Autumn Budget Statement of a massive overhaul of the Stamp Duty system is welcome, as many in the industry have been arguing for some years that the method of calculation as a slab tax is unfair. Henceforth it will be calculated on a sliding scale with less Stamp Duty payable on all transactions where the house price is less than £937,500. Early predictions suggest that this will have a beneficial effect on the number of transactions next year and some pundits are arguing that it may add between 1% and 2% to average prices.
In addition, the indications are that bank rate is likely to remain at its current level of 0.5% for the majority of 2015 with some forecasters now predicting no change before 2016. As a result we have seen a progressive lowering of the rate of interest of fixed term mortgage deals with some five year fixed products as low as 2.6%.
Of course, next year is an election year which inevitably brings with it a degree of uncertainty and nervousness which can be reflected in the market. The economic outlook has had a bumpy ride through the autumn with forecasts of slowing growth in China and a flat economy at best in Europe. Although these places are a long way from Cheshire they will undoubtedly have an effect on our market and prices through the coming twelve months.
Overall, however, we remain encouraged that the Chancellor’s changes will provide a boost to activity and that prices will continue to edge upwards through next year, albeit at a slower rate than this year.
We therefore look forward with continued optimism to the coming twelve months but with a little more uncertainty for the period thereafter.
John Halman is Managing Director of Gascoigne Halman, an estate agent with eighteen offices in South Manchester and is the North West Regional Residential Spokesman for the Royal Institution of Chartered Surveyors.