Labour = Houses prices go down, Torys = house prices go up?

dinkylink

Apologies for the rather simplistic and perhaps inflammatory headline...


Anyway, I have been reading various things in the news regarding the forthcoming election and how the result could potentially affect house prices.


The general consensus seems to be that if labour get in, even as a minority/coalition, then house prices will fall/the bubble will be deflated. This is because taxes and spending will go up, the economy will falter, help to buy measures will be reduced, renting will swing in tenants favour due to new legislation thus causing many landlords to sell up, and more new homes will be built increasing supply (granted, that last one probably won't make much of a difference).


If the Torys get in however (once again even as a minority/coalition), then house prices will rise/the bubble will keep growing. This is because taxes and spending will remain low, the economy will keep growing, help to buy measures will be maintained and further introduced (house ISA etc) and slightly fewer new houses will be built per year compared to what a labour government proposes thus restricting supply.


Is it really this simple? And if so is this why there is a certain amount of uncertainty in the property market at the moment? Are people waiting until the outcome of the election until they decide what to do about moving?


And by the same token, should we expect a dip in the market come May should labour get in and a boost should the Torys get in?


I'd be interested to hear anyone else's thoughts/predictions, even if it is really just crystal ball gazing...

Thrugelmir

Contrary to common belief Governments have little direct control over house prices. Not least that it no longer sets interest rates. Nor regulates the banks and other lenders.

padington

Labour want to spend a bit more and pay down the deficit a bit slower. They will be taxing prime properties partly to do that so we can expect the over 2 million market to take a knock and we can see it taking a knock in expectation right now.

On the other hand , the half a million pound properties may well do fine under labour. The mansion tax may well create a perverse effect whereby cheap properties suddenly are the clever move tax wise and we may be seeing that effect take place now.

Also the tories are planning to cap benefits quite seriously, that may effect housing benefit which may effect rent prices, it could make rents a little cheaper as the government isn't subsiding housing so much. So another reason for cheap property to do well relatively under labour.

Both seem keen to build more houses ( or flats to be more precise ) so wherever they build them and whatever they build will effect prices locally, however the big flat building companies are like diamond miners, they won't build too many to cause the price to crash, they're careful about supplying just enough.

It's probable the economy will have more fire with the Tories manning it because taxation will be lower, so the Tories do have the advantage of stoking the house prices from genuine growth. However it may be hard for labour to royally c*ck up at the moment because the economy is in a good period of its cycle.

So in a nutshell, good value properties under a million may well do ok (7% in London per year on average for at least next five years is my guess under both parties, maybe more under the Tories ) but any properties 1.5 million plus might see a serious crash under labour.

As always look for value properties next to good areas, which are structurally sound but can be upgraded nicely without too much expense which are in an area which seems to be on the mend with lots of regeneration money pouring in from all around, in an up and coming city - and you should be fine.

alberty

padington wrote: »

however the big flat building companies are like diamond miners, they won't build too many to cause the price to crash, they're careful about supplying just enough.

What makes you say that they don't want to build more, are they sitting on lots of prime land and not building? Not saying you're wrong!

padington

alberty wrote: »

What makes you say that they don't want to build more, are they sitting on lots of prime land and not building? Not saying you're wrong!

I read somewhere they have five years of land in the bank. Didn't you hear Milliband about forcing landowners to build on the land ?

They may force them to build but it seems only at market rates, which isn't going to be cheap anywhere near London. Whilst the 'free market' Tories hope to build them 20% cheaper than the market rate ...

http://www.thedebrief.co.uk/2015/03/so-what-actually-caused-the-housing-crisis-we-ask-shadow-housing-minister-emma-reynolds#.VRyGRoGkqrW

alberty

padington wrote: »

I read somewhere they have five years of land in the bank. Didn't you hear Milliband about forcing landowners to build on the land ?

No I missed that. The phrase is 'Landbanking', not sure that developers are the worst culprits, and they strenously deny they do it (but they would!)
I wonder why they do it. You would think it was always better to build than leave empty, and enjoy the rental income while prices rise, then sell when the price rise flattens out like now possibly.

http://www.theguardian.com/uk-news/davehillblog/2014/mar/02/london-housing-crisis-landbanking

Running_Horse

alberty wrote: »

What makes you say that they don't want to build more, are they sitting on lots of prime land and not building? Not saying you're wrong!

Last time prices faltered builders simply stopped many developments and waited for prices to rise again. There was a site near me given permission for 1000 houses that was left untouched for eight years. They have only started work because prices have risen again.

If it were possible for central government to choose sites, buy them at agricultural rates, then parcel them out to numerous smaller companies, then it might be possible to break the stranglehold of the big construction companies and bring prices down.

CLAPTON

Running_Horse wrote: »

Last time prices faltered builders simply stopped many developments and waited for prices to rise again. There was a site near me given permission for 1000 houses that was left untouched for eight years. They have only started work because prices have risen again.

If it were possible for central government to choose sites, buy them at agricultural rates, then parcel them out to numerous smaller companies, then it might be possible to break the stranglehold of the big construction companies and bring prices down.

what stranglehold is that you are talking about?

the reason building land is so expensive is that all governments have keep a strangle hold on planning permission.

antrobus

dinkylink wrote: »

..The general consensus seems to be that if labour get in, even as a minority/coalition, then house prices will fall/the bubble will be deflated. ....

What has led you to believe that there that specific 'general consensus'?

dinkylink wrote: »

...I'd be interested to hear anyone else's thoughts/predictions, even if it is really just crystal ball gazing...

I would point out that over the years 1997-2007 real house prices (measured gainst the RPI) increased by 223%, whilst over the years 1987-1997 they increased by 22%, leading to the conclusion that "the period, 1997-2007, was exceptional in terms of real average house price rises."

https://fullfact.org/factchecks/grant_shapps_house_prices_triple_under_labour-2945

Even if you were to factor in the drop or pause in house prices that took place in the years 2007-2010, the sheer scale of the previous increase would lead one to the conclusion that the last Labour government presided over a quite unprecedented increase in house prices.

On the basis of past performance, one therefore might reach the opposite conclusion.

purch

dinkylink wrote: »

Is it really this simple?

No

dinkylink wrote: »

And by the same token, should we expect a dip in the market come May should labour get in and a boost should the Torys get in?

No............................

carslet

House prices went out of control under labour, this is when they became unaffordable, remember Brown saying " I will not let house prices get out of control" ? well the the opposite happened and this is the mess of it all now.