2018 has certainly been a year of two halves or so the main commentators would have you believe. Early signs were that sales departments of estate agents throughout the region seemed to be enjoying excellent market conditions and it appeared that the market was going to withstand all that was thrown at it. With excellent transactional volume, good year on year price growth all fuelled by demand and an apparent determination not to be sidetracked by the B word. However, as we moved into Q3 the landscape began to change. Not solely, in my view, a result of the Brexit storm.
Over the last few years we have seen a continual assault on the market – taxation increases at almost every point, be it stamp duty land tax, erosion of tax relief on finance costs for buy to let, capital gains tax for overseas investment to name but a few. In August ’18 we saw only the second interest rate rise for 11 years, meaning we now have a whole generation of home owners who have hardly experienced an increase in mortgage payments…….. let’s hope they all took out PPI, no wait a second?
Then there is the 10-year price rises versus’ slow/stagnating wage growth. The costs of entry to the market have never been higher, the average cost of a home in Cambridge now represents 13.5 times the average salary (compared to just under 8 times average salary across the country as a whole).
As we head towards 2019, not to mention 29th March, we have continued uncertainty which is the factor that seems to stall not just the property market but everything else as well.
Despite all the headwinds the market continues to perform and in Cambridge we haven’t arrived in quite the buyers’ market some are seeing.
Not surprisingly, as the barriers rise in sales the lettings market continues to be reassuringly stable. It offers flexibility, lower costs of entry and, more so than ever, fantastic quality as the population has become more discerning on type, style and quality. This is welcome news and we now have a market wanting to deliver high specification and an audience willing to pay for it. The availability of a quality housing stock is a vital part in attracting people and industry to the city.
However, the lettings market isn’t immune to government interference, and there is a planned ban on tenant fees expected to be implemented in April. I am all in favour of regulating charges- paying a fair price for a good service, particularly when you hear some of the unfair charges some agents choose to impose on tenants. This blanket ban will certainly impact on the market as the work and cost remains (or likely increases) but the revenue is removed. Depending on how a business is modelled the impact could be huge, possibly terminal for some agencies. This has to be an unintended consequence of the Government’s objective to regulate and level the industry.
Next year, just like every year, will undoubtedly present challenges. What these challenges will be remains to be seen but that’s all part of it. Our role is to embrace and overcome them, whilst continuing to provide great service and advice because let’s not forget for the vast majority of the population a home isn’t a business, it is much more important than that.