What will happen to prices in the second half of 2015?

After the shock of the Conservatives returning to power with a majority at Westminster, all the potential issues and possible uncertainties of a hung parliament has lifted the cloud from the Solihull property market.  There seems to be new signs of life for house prices after a subdued six months.

Against the back drop of Labour’s election promises of rent controls and three year tenancies, some Solihull buy-to-let landlords were waiting to see how these new policies would be implemented before they committed themselves to buying more property for their portfolio. Now that uncertainty has been removed, the long term picture is more positive.

So, with all that uncertainty now removed, where will prices go next?  Well, with inflation at zero and with the money markets happy that David Cameron is still at No.10, the Bank of England has no reason to raise interest rates until 2016 at the earliest. As mortgage rates are at their lowest levels since 2010, landlords with large deposits will now be wooed by the mortgage companies in the coming months with low rates.

Also, over the last few years landlords have benefitted from a booming Solihull job market. Unemployment in the borough has dropped to 1.2% and whilst 894 people were claiming unemployment benefit a year ago, the figure is now around 571. With more jobs and better pay, tenants have been given better spending power and are therefore more willing to pay for good quality Solihull properties, pushing everything northwards.

Some landlords might be nervous about the Tory’s plans for the housing market in the next five years in terms of demand for their rental properties. One of those schemes (which is in the news a lot at the moment) is for Housing Association tenants to have the ‘Right To Buy’ their property. Tenants such as these were never in the private rented sector to start with and therefore will actually increase the supply of properties in the housing stock in decades to come. On the other hand, the government’s ‘Help to Buy Scheme’ has only helped 36 (yes 36!) owners purchase a property since April 2013. Considering 2,358 properties have changed hands in the last year alone in Solihull, I don’t think this scheme made a huge difference to our local property market.

Arguably, the biggest influence, when it comes to tenant demand of rental property going forward, comes from the shift in the mindset and attitudes towards renting itself. Twenty years ago, renters were seen as second class citizens. In Solihull, as in the rest of the UK (apart from Central London), renting continues to offer good value for money for tenants.  If you are an existing landlord in Solihull or thinking of becoming one, then I must suggest you out seek specialist advice and opinion. Like many agents in Solihull, we will happily give you our opinion on the current state of the market and the advantages/disadvantages to investing in the Solihull property market if you pop into our offices.