Terrorism, Donald Trump and worldwide property markets

We are now a decade on from the 2007/8 worldwide economic collapse and while many property markets have recovered some are yet to regain their 2007/8 levels. Interest rates remain extremely low, mortgage rates are very competitive although mortgage restrictions in the UK in particular have dealt a bitter blow to the first-time buyer market. The fact that worldwide interest rates have not yet risen significantly from their historic lows suggest there is more work to be done. However, when you also throw in terrorism and Donald Trump it could be a rocky few months.

Stock market uncertainty

While US markets are still within touching distance of their all-time highs there has been a mood change over the last couple of weeks. The UK has also been impacted by political upheaval in the US as well as terrorism on mainland Europe. There are growing concerns that Donald Trump is doing more harm than good and with North Korea seemingly on the verge of war surely now is the time for negotiation and reconciliation?

While stock markets in the US have performed particularly well over the last 12 months it is worth noting that in the UK there has been a growing trend towards property purchase as opposed to direct stock market investment. Even though the buy to let market has levelled off of late it has been an extremely active and a growing part of the UK property market for some time now. Whether the introduction of “unfair” additional taxes will hit this market in the medium to long term remains to be seen.

Fewer people moving house

One reason why UK house prices have held up relatively well, although they have shown signs of weakness of late, is a significant reduction in people moving. Historically we would see a mix of upsizing and downsizing but there has been a dramatic change in this particular trend. Fewer elderly people are looking to downside because of the additional stamp duty costs. Even though fewer properties are available for those looking to upsize it is worth noting that many people who would like to upsize are struggling to raise the finance.

So, we have first-time buyers effectively priced out of the market due to new mortgage regulations, elderly homeowners reluctant to downsize because of additional costs and the few people looking to upsize not able to find suitable property within their price range. All in all, on the surface it looks as though there are some challenging times ahead from the UK housing market.

Political change

Whatever happens over the next four or five years we should see some significant investment in housing stock. Whether this is council housing or an increase in first-time buyer properties remains to be seen but there has been a significant shift in the political debate. While immigration and the European Union were obviously headline news in the last election, the housing market was also very important to many of the electorate. Any political party seeking re-election and any political party looking to be elected at the next general election will need to make significant promises on the housing front – and keep them!

There have been some bizarre claims that future a Labour government would nationalise unused housing stock but this is just not possible. The housing industry needs cold hard cash invested now, a slackening of planning regulations and the recycling of underused and unused properties across the UK. This will need to be done under the guise of a capitalist marketplace because constant meddling by the government of the day would not go down well with private investors. Whether Labour or the Conservatives were to win the next election, housing is and will remain at the forefront of the minds of many of the electorate. The politicians would forget that at their peril!

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>