Over the past year, investors in the property market have faced a raft of political upheaval and unexpected results that have left ‘uncertainty’ as the defining term to describe sentiment towards investment.
With the Brexit vote, the US election and fears over the future of the EU as a whole coming to the fore, investors have been asked time and again to review their intentions in the market, and now it’s happening again.
Last week, prime minister Theresa May announced that on June 8th, the British electorate will once again go to the polling station, with a snap general election – the first since 1974 – taking place. Watch speech…
Clearly the Conservative government are certain that they will be able to retain their majority, but what will it mean for the certainty of the property market nationwide?
The good news is that precedent is on the side of the market, and while uncertainty is always feared to be bad news for the sector, this time around, it’s unlikely that we’ll see any negatives coming from the vote. Here, we take a look at just a few reasons why.
Continuity in the market
When the Conservative party won the majority of the vote in May 2015, it came as something of a shock, with most expecting to see a repeat of the coalition that was formed five years earlier. However, just two years on, and the strong likelihood of a Tory win in the snap election is good news for the property sector.
Continuity is always good for the property market, because it means there’s no great shake up expected. With the Conservative government having laid out its Housing White Paper just a few months ago, it’s policy on housing is clear, and while it might not always be overly favourable to investors, the fact that we already know what the government’s policy is is good news, whereas the likelihood of a new party coming to party would raise fears about what it would want to change.
In addition to this, the present government has actually not treated the market too badly in its first two years in Westminster. Since 2015, both rental and house prices have climbed, while there have been concerted efforts to improve housing stock, and the Build to Rent sector – the cornerstone of investment in 2017 – is arguably in a better place than it’s ever been.
Little time to worry
One of the main reasons the property market often falters a little around the time of elections is that everyone starts to worry in the run up, letting concerns simmer for a while before the vote actually happens. The good news this time around is that there’s little time for this to happen.
The fact that the vote comes less than two months after its announcing last week means that many experts are predicting it will be business as usual in the run up.
Ed Heaton, managing partner of Heaton & Partners, said: “The snap nature of the announcement, means that there has been no long build up with buyers and sellers wanting to hold off. Whilst the outcome is widely expected to be a Tory landslide, the element of uncertainty is limited because of this.”
History is on the market’s side
While elections breed uncertainty in property markets like nothing else can, when it comes to the actual tangible outcomes, there’s nothing to suggest that voting periods actually derail the market too much.
City experts say that previous mid-term snap elections in both 1966 and 1974 have had little in the way of negative effects on the market, while Grainne Gilmore from Knight Frank said that historically “in terms of buyer demand across the country, no conclusive trend is apparent around election time”.
Sentiment at the current time is also looking good for investors. Ms Gilmore said of the market at this time: “The slight pickup in values in the first three months of 2017 is an indication that prime markets are starting to stabilise following three consecutive quarters of price falls.”
Meanwhile, an eMoov survey last week reported that some 56.7 per cent of sellers in the market are continuing with their intentions in the market, compared to just 18 per cent who are putting them on hold as a result.