Nerve-racking events in other markets have diverted attention from housing in recent days. As global share prices gyrated, there was advice from doomsters on how to turn your home into a bunker with supplies of tinned food and cash sufficient to survive financial mayhem, rather than counsel on the future direction of that property’s value.
Such guidance is a staple of stock market crises; personally, I find the prospect of subsisting on baked beans for months almost as disturbing as the violent fluctuations of the Shanghai Composite, the S&P 100 and the Footsie.
After the “Great Fall of China”, stocks and bonds rebounded, although the mood will remain nervy. For the moment, contagion has not spread from shares to housing. Forecasters suggest that prices may move more strongly upwards than previously thought — not just because a rate rise appears to have been postponed, thanks to worldwide equity angst.
BNP Paribas Real Estate said this week that it is now expecting an average house price rise of 30.4 per cent in the next four years. The southwest is expected to top the league, with growth of 39.7 per cent, followed by the West Midlands (34.9 per cent) and the southeast (32.5 per cent).
Other commentators, such as Knight Frank, believe the north will rise by 14 per cent by 2019, but BNP Paribas predicts a 34.9 per cent increase, “as the benefits of economic growth extend out across the country”. Scotland may fare less well, with estimated growth of 18.7 per cent. London may also proceed at a slower pace, advancing by 24.8 per cent with out-of-pocket savers from Shanghai less able to purchase apartments in the capital’s new-build blocks. Nevertheless, by 2020, the average London property will still be worth 80 per cent more than at the time of the 2008 economic crisis, showing that a home need not be a bunker to be a safe haven.
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Statistic of the Week
There are conflicting views on the summer budget changes to landlords’
tax breaks. Some fear that they will drive investors to sell up — reducing the supply of accommodation to let and adding to the woes of Generation Rent. Others seem confident that the enthusiasm for the rental business will be undimmed. Amid the clamour, the opinions of one group are not being heard. The tax-perk curbs were supposed to convince hapless first-time buyers that they would have a better chance of climbing on to the housing ladder. I don’t get the impression that they feel any closer to this goal.
Under the budget measures — to be phased in from 2017 — buy-to-let investors who borrow to acquire homes will no longer be able to claim higher-rate tax relief. The resulting tax bills will mean that a few landlords are operating at a loss. No wonder they are signing the online petition calling on the government to rethink the plan. Support for this campaign comes from the Institute for Fiscal Studies, which contends that rental homes are already taxed more heavily than owner-occupied properties.
Are banks convinced the chancellor will execute a volte-face? Or do they think that landlords can recoup their losses by raising rents — a dangerous assumption. Whatever, they have decided to provide more buy-to-let loans.
As noted by Moneyfacts, the analytics group, there are now 1,000 deals on
offer — our Statistic of the Week. This is the highest number since April 2008, when the average fixed-rate loan was 6.48 per cent. It now stands at 3.8 per cent, giving landlords ample
opportunity to reduce their financing costs.
If the online petition gains 100,000 names (there are 20,562, as we go to press), the tax-relief restriction plan will be “considered for debate in parliament”. The chancellor may still
be unperturbed. Why? Only one third of landlords rely on mortgages to build their portfolios.
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If some landlords depart the industry, they will be replaced by new entrants exploiting pension freedoms — also thought up by the chancellor.
Shades of grey
The continuing proliferation of grey paint shades is a sign of innovation in this sector, but it also poses a problem if you want to choose between these diverse hues, as I discovered when trying to repaint the front door of our house.
Is it acceptable to knock on the door of a house whose door is the exact shade of pale gunmetal that you are seeking and inquire whether it is Dulux or B&Q? Is it OK to show the man in the paint shop a bottle of grey nail polish and ask him to find a match? In the end we made our selection, thanks to various apps. I am happy with the result but a bit conflicted as more greys have appeared in the Edward Bulmer range. The subtle shade pictured above is Fine Grey.