A sunny Easter is every estate agent’s joy. It’s the season when warmer, longer days bring out potential buyers, particularly home-movers who want to tie up everything in time for schools in September. For sale signs sprout faster in front gardens than daffodils. But will spring 2015 turn into one of the oddest markets in years?
The election, we’re told by some experts, will temporarily deter people from buying, although it’s not entirely obvious why. Do Mr and Mrs Miggins of Middle England really defer buying a new home because they’re not sure if Miliband will patch together some sort of pact with the Scot Nats?
And if there are pre-election jitters, someone forgot to tell homebuyers. Figures from Rightmove, the country’s biggest property portal, show that March was the busiest ever month for the site. There were 115 million visitors to the site during last month, and they leafed through an extraordinary 1.6bn pages, up 19% on a year ago.
But maybe those eyeballing Rightmove during March were not young adults seeking their first home or families hoping to move up the ladder, but the 65-pluses. In the past, retirement has often prompted homeowners to sell the family home for something more manageable. But, from Monday, pensioners will be competing ferociously for the same starter homes and semis sought by younger buyers.
Easter Monday is the first day of the “pensions revolution”. In a normal year, around 400,000 people with defined-contribution pensions retire, and most have had little option but to swap their savings for an annuity – a guaranteed income for life. But in what may go down as one of the defining policies of Osborne’s chancellorship, pensioners will from Monday be free to do what they like with the money.
It is a hugely popular policy. But how much of those pension savings – estimated at around £12bn annually – will flood into the one investment that retiring baby boomers know from experience always seems to go up?
Yes, there will be large amounts of tax to pay before pensioners can throw it into property. But so confident is the chancellor that Britain’s senior citizens will cash in that he has pencilled in an additional tax haul of around £4bn over the next five years.
The explosion in older landlords may explain another peculiarity about Britain’s property market. B&Q said last week it would shut 60 stores, switching its focus to its Screwfix chain, targeted at tradespeople. Commentators have waxed on about how Britain has fallen out of love with DIY. But maybe this is yet another baleful impact of the buy-to-let boom; those nine million people now renting privately won’t be spending Easter painting, decorating and putting up shelves. They’re not allowed to. That’s the landlords’ business now, and they hire in labour to do it instead.
Will pension money push property prices even further out of reach? Probably. But this will be an uneven story. London traditionally leads the market, but this time around it is likely to be anywhere but the capital. Sterling’s precipitous rise in recent weeks makes a London purchase daunting even for foreign millionaires. Indeed, overseas buyers who invested a few years ago in the capital will be tempted to cash in and buy in what, in euro terms, look like highly attractive markets, such as Spain or Italy.
Meanwhile, domestic buyers in London’s fancier postcodes face the mountain of stamp-duty increases and possible council tax rebanding. And the sort of prices that even mundane flats fetch in any part of the capital will be out of reach of the pension-pot buyers. Don’t expect prices in London to go anywhere fast this year.
The real action in property this year is likely to be in towns attractive to investment buyers: university cities with large student populations, towns that have recognised rental demand and areas where constrained supplies of newbuild will prop up prices. None of this is good news for first-time buyers, firmly priced out of London and soon to be priced out of a starter home – possibly by a granny.
Gambling in Greece
Another high-stakes week looms for Greece. The debt-crippled country has to make a €460m repayment on a loan from the International Monetary Fund on 9 April and is racing to find the money. Prime minister Alexis Tsipras has been doing the equivalent of searching down the back of the sofa for spare cash – raiding the coffers of the Athens Metro and the public health service, and seizing EU subsidies destined for Greek farmers.
Nevertheless, there have been increasing suggestions that, if push comes to shove, Greece will choose to miss the IMF payment in order to be able pay pensions and salaries due to government workers a few days later.
Interior minister Nikos Voutsis was the first to raise the prospect of a missed payment, followed by a Greek Treasury official in German news magazine Der Spiegel. On Friday Nikos Filis, Syriza’s parliamentary spokesman, made the same suggestion. There is also speculation that Athens is preparing a new currency and is ready to step in to nationalise the banks to stem the inevitable capital flight that would follow non-payment.
Each suggestion was shot down by government sources, who are engaged in the ultimate game of brinkmanship. The Greeks have proposed a series of economic reforms – while easing austerity measures – in the hope of seeing the final €7.2bn tranche of their last bailout. So far, to no avail.
Greece’s position is made more difficult by the progress of near neighbour Cyprus. Bailed out two years ago, the island has seen its fortunes transformed to such an extent that President Nicos Anastasiades will tomorrow remove all the capital controls put in place at the time. He made matters worse for Tsipras by admitting that Cyprus is preparing for a Greek exit from the eurozone.
We have been here before. Since January there have been two possible default days. Every time Tsipras found the cash, but one day soon, with declining in tax revenues and goodwill all but exhausted, his luck will run out.
Bolland still playing catch-up
There were back-slaps all round for Marc Bolland for finally managing a rise in clothing sales at Marks & Spencer after four years without growth. Bolland said the 0.7% increase in underlying sales in the past three months was a triumph for improved quality and style. The PR team certainly deserve plaudits for persuading fashionista Alexa Chung to wear its suede skirt, but does that show substance behind the revival?
The growth was down to an upturn at M&S.com after months of distribution problems and a new website that forced customers to reregister. Finally offering a smooth online service has pushed sales up 14%. There’s plenty more opportunity: the website contributes 15% of M&S’s general merchandise sales, compared with more than 30% at John Lewis. But that’s just catch-up. We can’t call the turn at M&S until sales grow in stores, too.
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