However, with the exception of Northern Ireland, house prices in all UK regions are higher than they were at this time last year.
Robert Bartlett, Chesterton Humberts’ CEO, comments:
“House price growth in London should continue to outpace the rest of the country as interest rates remain low and sterling stays weak. Another factor in favour of London’s growth is that the capital relies less heavily on the public sector than other UK regions and so is less likely to suffer as much in a heavy fiscal retrenchment.
“Overall, prospects for homeowners and prospective homeowners remain hazy with a Conservative/Liberal Democrat coalition as the parties have significantly different policies on many issues related to property which will need to be aligned in some fashion.
“The abolition of HIPs, which both the Conservatives and the Liberal Democrats have promised to scrap, will do much to help create more fluidity in the market place allowing people to enter the market without facing the unnecessary costs associated with HIPS or the restrictions imposed on not being able to offer a property for sale until a HIP has been produced.
“The Conservatives have proposed the scrapping of stamp duty for properties under £250,000 which should help ignite a more sustainable property market recovery, where sales are driven from the bottom up, by first time buyers entering the market, rather than by sellers downsizing to reduce debt, which is what has been happening over the past two years.
“However, it’s not yet clear what the Liberal Democrat policy will be on stamp duty other than to propose a new law ensuring properties can’t be sheltered from stamp duty by placing them in an offshore trust. The effect of this would only be felt at the very high end of the market.
“The Conservative proposal to raise the inheritance tax threshold to £1m may face opposition from their coalition partners as the Liberal Democrats have not proposed any amendments to the current system. Raising the threshold would aid a huge proportion of hard working middle England, people who have saved all their lives to own their own homes. The average four bedroom detached house in most parts of the country would be valued at over £325,000 and thus currently subject to inheritance tax. Raising the inheritance tax threshold will do much to encourage people to save and build wealth.
“The threat of the Liberal Democrats annual 1% mansion tax on properties over £2mn still remains unclear. We feel this is a poorly conceived policy with implications far beyond raising a relative pittance of additional tax income. This measure could not only slow sales in a market just entering recovery, but also signals to the country’s economically vital financial sector that it remains under a sustained tax attack, thus encouraging further departures to greener tax pastures.
“However, overall, we are positive about the prospects of the new Coalition Government provided they can retain their current desire for genuine cooperation. We believe that the prospects for the UK property sector are well served by this coalition.”
Douglas McWilliams, Chief Executive of CEBR, comments:
“The latest Consumer and Housing prospects report from cebr shows UK property prices increasing by 5% over the course of 2010. This was based on an assumption that there would be a Conservative party majority in the House of Commons, which was the most likely outcome based on a consensus of bookmakers opinions at the time of publication. The extent to which this projection will have to be revised depends on how well the new Coalition Government can work together and how closely policy follows Tory party manifesto pledges.
The Coalition Government has promised to deliver an emergency budget within fifty days. Not only will this test the strength of cooperation between the Conservatives and Liberal Democrats, but it should also provide the clarity that home buyers and sellers have been waiting for and put the house price recovery back on track.”