Cameron, Clegg & Capello

May was a very strange month indeed. First we had the run up to the election followed by uncertainty caused by the coalition negotiations. My the middle of the month Liberal Democrats and Conservatives published their coalition agreement and promulgated their intention to dispense with the much maligned Home Information Packs, but neglected to say when. This created a week of turmoil within the industry and confusion to potential sellers. Worse, thousands of jobs were dependent upon the outcome and now, many HIPs companies have folded.

After much pressure, HIPs were finally suspended on 21st May and immediately properties started to flood on to the market. In fairness, many of these properties would have come onto the market anyway, but understandably sellers didn’t want to spend out cash unnecessarily hence a state of inertia was created. Happily, the last week of May and first week of June were phenomenal.
Now the dust has settled and frankly, the market is continuing as it was in April and showing signs of improving.

The biggest threat to sales over the next month is not political nor is it financial. No, the threat to activity levels is more likely to be as a result of the World Cup. The same old problems of securing mortgage finance and cautions mortgage valuations remain, but the better our respective teams do, the focus will be on football. A successful campaign will be good for the economy. During the last World Cup, the British Retail Consortium reported an extra £1.5b spent across the retail sector.

Of course the emergency budget will be of crucial importance, but will affect the public sector first rather than the London housing market. There is no doubt that should the rumoured changes to Capital Gains Tax be as suggested, a lot of landlords may revisit their investments. This seems more a Conservative concession to a Lib-Dem policy and will harm the lettings market which is already suffering a shortage of property and inevitably result in an increase in rental values. The issue is that lower paid workers in London, often key workers, cannot afford to buy and will be squeezed of being able to rent. As the number of new homes and availability of affordable homes is falling short of the minimum number required, this is a pressing issue which the Government must consider, especially as there will be increasing pressure on public sector pay.

The Government seems committed to making decisions deemed necessary to address the severe economic problems, even if these decisions are unpopular. They have a mammoth task which seems almost as difficult as Fabio Capello’s quest to lift the World Cup trophy. I will keep my fingers firmly crossed on both counts.

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