What Effect Could the General Election Have on the Property Market?
After the surprise snap election called by Theresa May, voters will yet again head to the polling booths on 8 June. However, as much of the discussion has centred on each party’s manifesto and their post-Brexit outlook, some domestic matters have been overlooked.
One such issue comes with the property market and especially how the new or existing government will deal with a chronic undersupply of UK housing. In the build-up to election day, we’ll take a look at how property in the UK could be affected.
By studying previous election patterns, a correlation emerges in relation to property market transactions. According to Alison Platt, chief executive at estate agent Countrywide, the past nine elections has seen a dip in sales in the weeks before polling day.
However, one difference this year is the timespan between Theresa May’s announcement on 18 April and the election date itself. We don’t have the same long run up as usual, meaning the normal ebb and flow of property activity is less likely to be affected.
A survey conducted by eMoov helped confirm this. They canvassed 1,000 potential buyers/sellers in regard to their intentions now the election has been declared, asking the question:
“If you are buying/selling a house, will you still go ahead regardless?”
The results were pretty conclusive with nearly 60% saying they wouldn’t be discouraged. Only 18% stated they would wait until the result is announced, with the remainder being undecided.
The main factor behind the snap election is to help strengthen Theresa May’s position as Prime Minister. Should the Conservatives win (the most likely outcome according to the polls), investors will react positively to her ‘strong and stable’ mandate.
This is also the case with Brexit, with the Tories committed to finalising Article 50 as efficiently as possible. Again, property speculators prefer this attitude as long and short-term market conditions are likely to become clearer.
Looking back over previous elections also shows activity begins to pick up in the three months after the result is announced. According to Countrywide, transaction levels can increase by as much as 13%. Likewise, the former residential chairman of the Royal Institution of Chartered Surveyors Jeremy Leaf has noted:
“If the result is decisive either way, that will give the Government a greater mandate for its existing policies and is likely to result in a surge in activity in the housing market at least for the honeymoon period afterwards.”
In their manifesto, the Conservatives promise hundreds of millions of pounds invested over the next five years, although precise figures weren’t given. Labour addressed the lack of housing in theirs, promising to build one million new homes during their time in government.
Whatever the result, the snap General Election is unlikely to affect the UK’s housing market severely one way or the other. The stability seen after Brexit is therefore likely to remain, especially in the short run up to the vote on 8 June.
If you’re not sure about investing your hard earned money in property now, take a look at Why Property is Still the Most Lucrative Investment in 2017.