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

NorthFin

dinkylink wrote: »

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 .

Whoever appeals the most to the renters will get the most votes. No its getting over 50% of the voting population are rents.


Those greedy landlords will likely see the end of the bubble and sell up before it bursts and vote labour.

princeofpounds

Is it really this simple?

No, but you are approaching a slightly more sensible way of looking at it.


What you have to understand is the monetary/fiscal policy mix. Both factors drive inflation, and so with an inflation targeting economic regime like the one we have (roughly!) the looser fiscal gets, the tighter monetary has to be.


The coalition has been running a very tight fiscal policy (semi-austerity). This has permitted the BoE (and the credit markets as a result) to run a very loose monetary policy (low interest rates and QE).


Labour propose to run a looser fiscal policy. The BoE would have to run a tighter monetary policy, and if they don't, the markets will do the job for them. Higher interest rates would lead to lower house prices.


That is not to say that the Tories stand for higher house prices and Labour for lower. Labour had a strong record of boosting house prices in their period in charge, whilst the Tories in the early 90s hiked interest rates which slashed house prices. It's dependent on the economic situation of the time.


More at this link and all over the web:


http://en.wikipedia.org/wiki/Policy_mix


As a little appendix to the above, the Tories as a party have tried to open up the pressure relief valve on house prices caused by low interest rates, by easing the real constraint on building, planning law.


That's despite the fact that they have always had a NIMBY home counties-dwelling contingent in their support.


Obviously they haven't gone far enough to actually make a difference, but it just illustrates that they do not have a single-minded objective to boost housing prices; that's largely a by-product of their attempt to stop the debt mountain killing the economy.

dinkylink

thanks for everyone's comments.


Just to clarify, with regards to the title Labour = Houses prices go down, Torys = house prices go up?, I was referring specifically to the upcoming election and how it would affect house prices now depending who gets in. I am aware that the boom years between 97-07 were presided over by a labour government!


And I guess by general consensus I mean the impression I have got from reading various articles/forums and from people I have spoken to in the housing industry. So yes, perhaps that isn't the general consensus at all....

Thrugelmir

Running_Horse wrote: »

Last time prices faltered builders simply stopped many developments and waited for prices to rise again.

Faltered? Went bust more like. Lloyds Bank at a point in time became the 4th largest housebuilder in the UK. Due to HBOS's involvement in the sector. Companies over reached themselves in the boom years up to 2007/08.

Killerseven

when more renters than owners make up the voting population, then whoever appeals to the majority or voters is the one who wins.

Generali

Any chance that someone could make a decision as to which part of the board this belongs in?

cells

Killerseven wrote: »

when more renters than owners make up the voting population, then whoever appeals to the majority or voters is the one who wins.

But renters are less likely to vote partly due to being younger and partly due to heing renters.....

plus the change from owners to renters although rapid is still slow on a human time frame. At the current rate of +300,000 homes becoming rented per year its still gona take 20 years for renters to outnumber owners

Thrugelmir

dinkylink wrote: »

And I guess by general consensus I mean the impression I have got from reading various articles/forums and from people I have spoken to in the housing industry. So yes, perhaps that isn't the general consensus at all....

Governments don't control house prices. The result of the policies they follow will influence house prices. To the consumer what matters is confidence. Security of job, income , interest rates , etc etc. People will determine the outcome.

Crashy_Time

padington wrote: »

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.

The problem with having already bought into the Ponzi Paddington (no joke intended, honest) is that you need new entrants to believe what you believed. That is a hard sell now IMO.