General Election Slows Property Market Down

Its half way through January and the office agency market in central London is about to get going after the long Christmas break. There is generally a positive outlook for 2015 with base rates expected to stay a consistent 0.5% for half the year (the lowest ever recorded) and continuing below 2% for the remaining 6 months. Oil prices are staying low, wage growth is anticipated and people will have more money to spend. However, we have a huge uncertainty hanging over our heads until May which is in the form of the general election; this will slow the property market down almost before it’s had time to kick off, as those with any sense do not want to make commitments ahead of the election.

Here at Morgan Pryce we are expecting to see another coalition – the risk of mansion tax from Labour and leaving the EU from the conservatives means it’s unlikely either party will win outright. Nevertheless one thing we know for certain is there will be an increase in taxation/higher interest rates, and a cut in public spending.

The property market in 2015 is going to have to overcome a few challenges. The first of which is a lack of skilled surveyors and the second is the ever increasing cost of development which is especially concerning as we are currently suffering from a major housing and office shortage across London.  

There is a lack of supply of modern office space with surging employment growth and urbanisation increasing demand. Ollie Salter, a surveyor at Morgan Pryce states that “Vacancy rates are at an all-time low in the West End at 2.6%, anything below 5% is said to be damaging to the market which is clearly seen by the huge rents that are being achieved. Last year 23 King Street achieved the top rent of £130 per square foot exclusive!” The lack of supply needs to be address before all the smaller companies are priced out of London.

Let’s hope whichever party wins the election is able to provide some new office space to central London and the predicted rising interest rates don’t bring the market to a halt. 

This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.