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Where are the policies for housing?

The political parties have published their election manifestos setting out their vision of the way in which the country should be governed (at least until it all starts over again).

Bearing in mind the importance of housing to a large number of those who hold the right to vote, it is somewhat surprising that the manifestos do not spend more time on the issue.

The right-to-buy policies of the Thatcher Government brought homeownership within the compass of a great many more people and recent years have seen not only a hike in property prices but also a significant improvement in the quality of the housing stock.

Many people now have most of their assets in property. with much less by proportion held in pensions, insurance or equity investments.
The future prospects for the property market are crucial to the financial planning of a great many individuals.

The political parties seem to be largely focused on the point of entry into the housing market. Help for first-time buyers may sound an attractive policy to young voters but a policy to provide assistance to these buyers will serve to stimulate price inflation while there continues to be a shortage of suitable properties.

Sadly, there has been a focus on building flats which are proving to be unattractive both to many buyers and to lenders.

Most buyers still favour traditional housing and the challenge is to meet the demand for these properties, matching locations more closely to those areas offering the most favourable employment opportunities.

The effects of the current mismatch are already apparent with the market in many parts of the country struggling along the bottom of the graph while in London properties are moving quickly and price inflation is a reality.

The manifestos are all somewhat light when describing the parties’ proposals for tackling the fiscal deficit even though all commentators seem to be now agreed that public sector spending will have to take a significant hit.

There are suggestions that there will be both pay freezes and redundancies which will inevitably increase the financial pain for many families and may well stifle the fragile recovery that we have seen this year.

It can only be a matter of time before there will be a general rise in the level of interest rates, a move that would be welcomed by savers but would add to the difficulties faced by borrowers.

After the election, we will at least have a greater degree of certainty and with that may come the confidence in the future that both consumers and lenders need.

The fundamentals are such that there can be no doubt that the housing market will recover over time and the professional services of mortgage advisers will be in demand. Richard Fox is chief executive of the Chartered Insurance Institute’s Society of Mortgage Professionals

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