Take advantage of Osborne’s boom while it lasts

Chancellor George Osborne seems determined to stoke a pre-election house price boom.

The coalition has launched two separate schemes that are both designed to push up mortgage lending in the UK.

Potential homebuyers with a small deposit are now much more likely to get a mortgage. That in turn is already driving house prices higher.

I think the chancellor is making a mistake. Another property boom won't help the UK in the long-term. But that shouldn't stop you and I making money while the party lasts.

The fact is, Osborne will do whatever he can to keep house prices moving up for the next two years. He's got to get and keep the 'feel-good' factor going until the election.


That means there's plenty of time for investors to buy now and sell later at a good price.

And that means that - believe it or not - it might be worth buying into London's most aggressive estate agency…

Why this year could be good for Foxtons

Shares in London estate agent Foxtons (LSE: FOXT) have jumped by 15% since the company listed last week. Yet, I think you could still make money from the stock. The main selling point to Foxtons is that it's very much a London-based business. Nearly all of its 42 branches are located in the capital.

Land Registry figures show that London property prices rose by 6.9% in the year to June, whereas prices across England and Wales only rose by 0.8%. What's more, London prices are 6% above their pre-crash peak, while in the rest of the country they are still 10% below that peak.

You could argue that prices outside London will have to catch up, which means that London won't be where the biggest gains will be made in future. But I suspect that London will continue to outperform the rest of the country.

London's market is very different from the rest of the UK. It's supported by plenty of overseas buyers, not to mention City salaries (bankers still get bonuses, after all).

The biggest threat to the London market may be a strengthening pound, which would reduce overseas buying power. But given that Mark Carney is determined to keep interest rates as low as he can for as long as he can, we doubt the pound can get a lot stronger from here.

It's also worth remembering that what really matters to estate agents is transaction numbers. It's the number of sales going through the books that generates the commission ¬- house prices themselves are secondary.

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