With the upcoming election taking place on July 4th many eyes are eagerly waiting to see how pre-election campaigning and the ultimate outcome will influence the UK property market.
Traditionally, elections have been characterised by fears of potential tax hikes and dramatic
shifts in the market, but many analysts have optimistic expectations this time around, especially since the election announcement coincided with inflation dropping to 2.3%, bringing it closer to the Government’s benchmark of 2%. Additionally, there are hopes of a cut in stamp duty that can give the market a welcome boost.
We break down potential property market outcomes below:
A slowing market
The UK housing market has been experiencing recovery in the last few months with more homes coming onto the market for sale, and an increased volume of sales overall. Even with mortgage rates stalling at 4.5% to 5% there are signs of growing confidence among potential buyers, many of them first timers.
That said, the announcement of the election will likely mean that the market will slow as buyers and sellers wait to see which potential new policies and announcements are on the horizon, delaying until the autumn when the election is over. Buyers who are currently close to completing a property purchase will likely want to push through and finalise everything prior to the election itself.
There is likely to be an uptick in the market again once the election is finalised and with the event taking place sooner than anyone expected, there is more opportunity for buyer demand to gain traction over the autumn season with less uncertainty in the market.
How will house prices be affected?
One of the major concerns for buyers, sellers and industry professionals is how resulting property prices will impact a recovering market in the post-election period. Property platform Compare My Move has reviewed data of house prices in the 12 months following major elections and believes that house prices tend to rise by an average of 4.6% in the first 12 months immediately after the election.
According to property agent Knight Frank’s predictions, the Central London market will be impacted the most by political uncertainty, with the short term disturbance prior to the election wiping out a forecasted 1% rise in prime central London property prices. The agent’s prediction for the rest of the UK, greater London and prime outer London remains unchanged, with property prices rising around 2%.
Housing delivery and planning
A major concern currently impacting the market, and likely to be an election hot topic, is the housing shortage impacting many potential buyers. Housing delivery and planning has already been a benchmark topic for certain parties, with Labour aiming to deliver 1.5 million homes over the next five years. This is likely to impact the market in the long term but won’t have short term impacts on the current market immediately.
The rental market
With the ongoing property shortage causing skyrocketing rental prices, the rental market is a major point of concern for all potential new governments. From a policy perspective, perhaps the biggest impact of a July general election is the prospect of the Renters Reform Bill. In May 2023, the government published draft legislation for the Renters’ Reform Bill which included measures to abolish Section 21 evictions and end fixed-term tenancies.
When the election was called, the bill had passed a second reading in the House of Lords and was awaiting the committee stage. This means there’s no chance of the reforms becoming law before the election. Bills cannot be carried over into a new parliament, which means that whoever wins the election will need to launch a new bill if they want to introduce rental reforms.
Only time will tell how the new government will try to overcome the issue.
The next few months offer an exciting opportunity within the UK property market, and with inflation falling to 2.3% in the year to April, and another drop anticipated soon, it looks as though mortgage markets will remain relatively stable in the short term.
This is exciting news for buyers, sellers and estate agents who have experienced a fragile market in recent months and will benefit from the stability that will follow the post election landscape. While the next six weeks will be slightly tougher for new sellers entering the market, there is an opportunity for buyers to take advantage of a quieter market in a short window of opportunity.
Anyone looking to enter the UK property market or expand their current portfolio should consult with a professional to ensure they navigate this opportunity accurately. Tailor my Property has a professional network of financial, property and investment specialists who are able to help you achieve your goals and maximise on this particular window of opportunity.
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