I wrote last month about how the Government, in introducing a 3% stamp duty surcharge on second homes, had scored an own goal by slowing the entire market down – not simply stemming the popularity of the buy-to-let market as it had intended.
It has led to chronically low levels of property coming on to the market which in turn has pushed up prices – great if you’re a seller, not so great if you’re a first-time buyer.
But rather than wax lyrical about everything that’s wrong with current housing policy, as an industry we need to examine what needs to be done to address these issues.
Quite simply, how can we encourage prospective house hunters to list their properties?
Need vs. desire is key here. Those who ‘need’ to move, possibly due to job relocation or health issues, are likely to put their home on the market and start searching for a property to move to, often once they’ve secured a purchaser for their own home. These sellers are the ones currently keeping movement in the market alive.
Unfortunately, these are few and far between. Those who consider a move through desire – relocating to a more sought-after suburb, taking the next step up the property ladder, or simply who fancy something new – are more likely to take the view that they’ll market their own home once they’ve found the one that they wish to purchase. It’s here where the slow down occurs.
Levels of demand from both first-time buyers and property owners that would like to move up the property ladder remain strong. However, while the latter can’t find the home they want, they delay putting their property on the market. Meanwhile, many sellers don’t want to agree a sale to a buyer that hasn’t put their own property on the market. A stalemate is reached and a lack of new properties make it to the market.
However, unlike in chess where stalemate is terminal I believe that there are things which can be done to address the current situation in the property market – both within the industry and at higher levels.
Here at Andrews Property Group we’ve adopted a ‘consultation not valuation’ approach to those considering a move. We know that people start thinking about moving several months before taking action, and by meeting these potential ‘home movers’ at an early stage we can discuss their requirements and set up a specialist ‘homeseeker search’ in the roads they want to move to. This allows us to get more property on to the market and allows us to match people with the right properties. It’s really just a case of good old fashioned estate agency.
However, this isn’t something that we can solve alone and it’s here that the industry needs to call upon those in power - the decision makers - to make a change. And what better time than now as we face (yet another!) election to beat the drum for change?
On the one hand, the current supply problem could be solved, in part, by simply building more new homes and I don’t doubt that is something which will appear in many election manifestos over the coming weeks. For house building targets to be met, however, current planning legislation will also need to be reviewed.
But it’s where I started this whole discussion that I believe we can find the solution – stamp duty.
The whole economy relies on buoyancy in the property market. Everyone lives somewhere and everyone has an interest in the market because of this. Aside from the 3% surcharge on second homes, we know that there are large amounts of property held by the older generation who find it hard to sell due to the restrictive levels of stamp duty levied on their prospective purchasers.
Simply, any relief in stamp duty would help those both moving up and down the ladder which is why, with less than seven weeks until polling day, I’m calling on all those in power (and those vying to be in power!) to review the current stamp duty framework and commit to policies which will support the housing market and get it moving again. Stagnation, after all, isn’t good for anyone!
*David Westgate is Group Chief Executive of Andrews Property Group