Wednesday was the day of the Spring Statement, and whilst we are told that these
are very much not a ‘Fiscal Event’, there was still plenty of anticipation about what
might be said and where it looks like we might all be headed.
Here is our Petermans take on some of the key points from the Spring Statement,
and how you as an Edgware and Mill Hill resident might be affected when it comes to
the housing market…
Cuts, Taxes and Affordability
Although Wednesday’s Spring Statement was very much billed as being ‘not a Fiscal
Event’, the narrative coming from Westminster over the preceding days and weeks
had paved the way for cuts to public spending.
Rachel Reeves cited that ‘the world is a different place’ today than in October, as
benefits cuts were ushered in, mainly affecting individuals and families receiving
personal independence payments (or ‘PIP’s).
Whilst the 3.2 million families this affects aren’t necessarily those who prop up the
property market, there can be a knock on effect from it – unless, of course, the
purpose behind cutting the PIP is borne out, and those people find their way back
into work. That will remain to be seen.
The big difference in the world that Reeves didn’t utter aloud, but was referring to, is
that the USA now has a Trump government, and his threat of tariffs is likely to reduce
GDP and treasury income (and indeed, a mere few hours later the same day, 25%
tariffs on automobile imports into the USA was announced). Having previously
pledged not to increase taxes on working people, it felt inevitable that public
spending cuts would be on the agenda.
The government did stick to that prior pledge on taxes – there were no tax rises ‘for
working people’ announced on Wednesday –, but of course employers’ National
Insurance does go up in April, as announced in October’s Budget address.
It is inevitable that the added burden on employers will be felt be employees,
manifesting itself in reduced hours, delayed pay rises, and perhaps even
redundancies and lay-offs. At the same time, businesses facing extra costs will
undoubtedly raise prices, fuelling (don’t we love it?) inflation.
All of which has an impact on general affordability – and that includes the
affordability of property buyers.
Planning Reform and Housebuilding
The government pledged to build 1.5 million new homes over the course of this five
year parliament, and the reforms to the National Planning Policy Framework (NPPF)
and a modernisation of Green Belt policies is perhaps set to make this a ‘near
miss’… which is miles closer than successive governments have come since the late
1960s.
It is estimated that we will see around 1.3 million new homes built in the UK over the
period – and of course, Edgware may well see a good chunk of that, with largescale
developments such as the Broadwalk being pushed currently. Any loosening of
planning restrictions – or a cutting of the bureaucratic ‘red tape’ as it is being slated
as – will only ease such large planning applications through.
At the same time, Reeves used her Spring Statement to pledge an extra £2billion
boost to building affordable properties, to further push this housebuilding agenda.
It is easy to take these things with a pinch of salt – but, in this case, the Office for
Budget Responsibility (OBR) – an independent body that reviews government
spending policies – has supported the claim, and has forecast that this housebuilding
initiative will benefit the economy by adding 0.2% to GDP on its own – an economic
boost of almost £7billion.
What does this mean for the property market? It means a modest increase in
property values for a start, which the OBR says will rise by 2.8% in 2025, then by
2.5% per year until levelling off and dropping a little – 0.8% – in 2029. By this point,
housebuilding volume should start to impact property stock levels actually available –
and that goes for Edgware and the general North London area too.
The OBR also predicts a large increase in the volume property transactions, from
290,000 per quarter to 370,000 per quarter – an increase of 320,000 property sales
per year – and again, if we do see the Broadwalk and other large developments go
through, we will certainly feel this in the Edgware property market.
Meanwhile however, mortgage rates are set to rise again, with the average mortgage
rate peaking at 4.7% in 2028, and remaining the same until 2030. This is likely to
affect the amount that households save – currently 6.25% of disposable incomes,
but likely to fall to 3.35% by 2030. From a house buying perspective, this could mean
less into deposits, which would tie in with the levelling off or potential decrease of
property values by the end of this decade.
I’m thinking of selling my home in Edgware – should I do it now,
or wait?
The economic climate always plays its part in the way the property market performs’.
Not only are the two things inextricably linked, but the property market in itself is a
major economic driver. Generally speaking, when the property market does well, the
overall economy looks healthy – and that is why the lubrication of the planning and
housebuilding system is quite exciting, from a market point of view.
It is also generally seen as positive for home ownership prospects, as more
availability of property will slow down property price rises moving forward.
But we are not there yet.
The question of whether to move house in Edgware now, or whether to wait,
should – we think – come down to your personal preferences.
The market today is a little fragile, but overall it feels like it is coming out on the other
side from what have been more uncertain times.
Currently, we are looking at stabilising mortgage rates, and these are likely to be a
bit higher in another couple of years – so that could be worth bearing in mind,
considering the average property value in Edgware is just over £580,000, according
to Rightmove, compared to £265,000 nationally.
But realistically, the sort of property price growth being forecast over the next few
years – 2.8%, 2.5%, 2.5%, 2.5% – is not very different from where inflation might be
anyway. By and large there is not an obvious ‘value’ reason to move now, or in the
next few years.
So let it be about purpose. Why do you want to move? What aren’t you getting from
your current home? How will a move benefit you? Where will be the right location for
you for this next period of your life?
These are all the questions we ask when we are discussing values with our sellers.
Yes, we can help with bricks-and-mortar ‘value’ – and if you would like to know what
your house is worth, click here.
But helping people understand the value to them in moving to one place or another
place, that is the true delight in doing what we do.