Housing industry’s fate lies in the hands of voters

election.gif

The industry is holding its breath to see whether the general election in May will help boost the housing market.

Prime Minister Gordon Brown confirmed last week that the election will be held on May 6.

Fahim Antoniades, group director of Mortgage Centre ifa, says he is concerned about the impact the election could have on consumer confidence.

He says: “My biggest worry is not what policies will be implemented after the election but whether there will be a hung parliament. That would definitely knock confidence in the economy.”

And Ray Boulger, senior technical manager at John Charcol, says a change in government could also affect the next decision on interest rates.

He says there are significant differences between the fiscal policies of the two main parties which are likely to affect the market.

Boulger says: “The future of the Bank of England base rate is entwined with the political future of the country.

“The Monetary Policy Committee will want information from the new government on its fiscal plans because monetary policy is influenced by fiscal policy.”

Boulger believes a hung parliament is unlikely but adds that if it does happen the UK risks losing its AAA credit rating.

But Linda Will, sales and marketing director at Stroud & Swindon Building Society, says: “I don’t think the election will have a short-term impact on the housing market. It won’t bring about a feel-good bubble that encourages people to buy.

“In the longer term, if the Conservatives gain power and follow through on their plan to dispense with the Financial Services Authority we could see a new regulatory framework for the industry, which I’m not sure would help either.”

The Tories have pledged to prepare a Budget within 50 days if they are elected, and want to see interest rates remain low for some time.

The party plans to scrap Stamp Duty for first-time buyers on homes up to £250,000 and abolish Home Information Packs. It would get rid of the FSA and divide its responsibilities between the Bank and a new consumer protection body.

The Labour Party plans to keep HIPs and the Stamp Duty threshold at £125,000 but has abolished it for two years for homes up to £250,000. It wants to give the FSA a bigger role in regulating banks.

Meanwhile, the Liberal Democrats want so-called Safestart mortgages which would be available to borrowers with a 15% deposit at about 4.5%.