Godson des Forges' autumnal views
As much of Middle England are paddling their way down their local A roads, it’s a sure sign the autumn market has arrived. Since our last missive, two seismic events have happened. Oasis reformed, and a General Election was called, campaigned, and taken place. We are still to find out which will do more damage to the British public’s wallets.
The blessing for the property market (the Election, not Oasis) is the fact it was a short gestation period between calling the Election and Polling day. It also took place when the prime London market slips into a protracted holiday. The arrival of Sir Kier and the New Faces, with such a majority, granted the country much needed stability. Whatever your political persuasion, this is good and timing perfect for the autumn market.
Then, just when the country was getting in their cars to go and sit in Bank Holiday traffic, the Prime Minster drops the (expected) bomb of "There is a Budget coming (in October) and it's going to be painful.” Groan. And there it is, a few words that quickly applies the handbrake to many people making any significant financial decisions. It might not be as bad as we expect, allowing that false sense of relief, but it also pours cold water on two months of the crucial autumn market. For our market, CGT and Inheritance Tax are two great drivers in decision making: the former more immediate and the latter for long term planning. It was only on April 6th that CGT was reduced from 28% - 24% to entice second homeowners and investors to sell up and boost supply. This reduction will surely be reversed, and if put in line with Income Tax, only reverse any motivation to sell.
How might the October budget affect the prime London property market? Well, the expected rush of second home / investor property hasn’t been obvious, but we are a thin slice of a sizeable pie. Personally, I don’t foresee such an offload from this sector on our patch. First, the property might be rented and there’s not enough time to get a tenant out, get it marketed and sold by the end of October. Second, property ownership remains a popular asset, and the knee jerk might be to sell, followed quickly by “what will I do with the money”? Not everyone trusts other forms of investment, in other peoples’ hands, be it in commodities or volatile markets which they don’t completely understand. With property, it’s always in demand. Put simply, it’s tangible - you can look at it, touch it and if you really want to, hug it.
This is all speculation but if the tax rates are hiked up, a cynical self might say, wait out the 10 years for the cycle to come full circle again and take the punt that they’ll come down.
The demand will continue for those who need a home, where their sights are on the next 10 years +. Of the exchanges we’ve been involved with since April, only one was an investor, and even that was a special situation. Our specific area of London is emotionally driven, and short-term worries will be overridden by a want of a long-term home. The activity in the last two weeks has been encouraging and we’ll see how many pull the trigger before seeing the small print contained in Rachel Reeves’ red briefcase.
SOLD Cadogan Square - Guide price £3,750,000
Anecdotally, every year, there’s always some metaphorical stick in the spokes of the residential market and we’re all still here. As long and buyers and sellers are receptive to a fair deal (very Liberal Democrat), then we will continue to transact in a market that remains wonderfully resilient.