There is no doubt that the Labour Party conference last week produced a number of surprises which caught the Conservative party and David Cameron offguard. Over the last few days, ahead of the Conservative party conference in Manchester, the government has tried to play down the Labour Party’s new initiatives to control the cost of living and introduce a number of draconian measures in relation to empty properties. However, the introduction of the second part of the government’s Help to Buy scheme, originally pencilled in for the start of 2014, has attracted a mixed reaction.
Even just hours after the initiative, online property websites are already reporting a major spike in traffic as would-be first-time buyers look at properties which would traditionally have been out of their reach without the governments part guarantee.
Are we looking at a three-year honeymoon for the property sector?
The Help to Buy scheme is expected to be in place until the beginning of 2017 offering what many believe will be a three-year honeymoon period for the UK property sector. In the short to medium term it could be a win-win situation for all involved, first-time buyers climb onto the property ladder, the feelgood factor will help the economy and in theory UK taxpayers could make money when these heavily subsidised properties are sold. Is it all bad?
Quote from PropertyForum.com : “Is it worth looking at UK student accommodation?”
If you take a step back and look at the long-term situation, more demand for UK property in the short to medium term will push prices higher, effectively false support from the government will see more first-time buyers joining the market but possibly at the expense of future first-time buyers.
Short-term gain, long-term pain?
While a short-term spike in UK property prices will reintroduce a feelgood factor to consumers there could be trouble ahead. It will be interesting to see what the opinion polls suggest in the coming weeks and whether or not the UK government’s pledged to support first-time buyers will outflank recent Labour Party policy changes.
Sceptics will have you believe that the Conservative party is looking at the election in 2015 and looking to create the strongest feelgood factor in recent history. Do not forget that we are currently re-emerging from one of the worst economic downturns in living history and any glimmer of hope could turn the eyes of the electorate in the short to medium term. In many ways the electorate in the UK cannot afford to look too long-term and therefore, just possibly, David Cameron could have outmanoeuvred his political opponents but at what cost?
Concern, concern, concern
In what many will see as a repeat of the US mortgage crisis of 2008, when the pessimists were ignored and talked down, a similar situation is starting to emerge in the UK. We have a number of prominent investment experts expressing major concern about short-term property price movements but while consumers and investors continue to see their property values rising, many are oblivious to the potential problems in the longer term.
The Bank of England may well react to the ongoing increase in property prices, introduce measures to restrict credit but when you bear in mind that the UK government has just introduced part two of the Help to Buy scheme, there is little or no chance of any restriction in credit in the immediate future. How far will the UK property market move before people begin to get concerned?