What does the General Election result mean for the Southampton Property Market?

After the dramatic events of Election Day with 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 Southampton property market.  Talking to other Southampton agents, surveyors and solicitors in the area over the last few days, there are signs this has started a new impetus in the Southampton property market after a reasonable start to the year, when an amalgamation of tougher lending conditions, a natural correction after the strong recovery in Southampton property prices in 2014, and political uncertainty ahead of the General Election slowed demand.

Against the back drop of Labour’s election promises of rent controls and three year tenancies, some Southampton 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 portfolios. Now that uncertainty has been removed, the long term picture is positive.

So where next for the Southampton property market?  Well with inflation at zero and with the Money markets happy David Cameron is still at No.10, the Bank of England have 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 very attractive rates.

You see over the past couple of years, Southampton landlords have benefitted from a booming Southampton job market. Unemployment in Southampton has dropped to 2.25%, last year, 3,798 people were claiming unemployment benefit compared to today’s 2,473. With more jobs and better pay (as the level of rents is directly linked to tenant’s wages) there has been an increase in the rental prices tenants are willing to pay for good quality Southampton properties.

Some landlords might be nervous about Tory’s plans for the housing market in the next five years in terms of tenant demand for their rental properties. One plan is for Housing Association tenants to have the right to buy their property. These kind of tenants were never in the private rented sector and will actually increase the supply of properties in the housing stock in decades to come. The Government ‘Help to Buy Scheme’ has only helped to buy 229 Southampton properties since April 2013. Considering 6,204 properties have changed hands in the last year alone in Southampton, I don’t think it has made a huge difference to our local property market.

The biggest matter, 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 you were seen as a second class citizen if you rented a property. In Southampton, as in the rest of the UK (apart from Central London), renting continues to offer good value for money for tenants.  The key is to buy good properties in the locations that tenants want to live.