Election leaves uncertainty in the property market
Election leaves uncertainty in the property market...
The result of the UK’s general election last week left us in confusion and hesitation of what may happen next in politics. With the current hung parliament caused by the general election, this possibly has left people with a feeling of uncertainty with regards to the UK housing market. In a time of uncertainty, buyers can typically fall on the side of caution and wait before making any new property decisions. We at Jeremy Jacob perhaps challenge this and point to the past where the lettings market has continued to prosper off the back of uncertainty. We therefore expect the buy-to-let market to continue to attract investors for good returns and behave as a safe investment in the long-term. With almost a quarter of all households expected to rent privately by 2025, current landlords and new investors can continue to invest with assurance and that their asset delivers more reliable returns than any other type of investment over the last two decades.
Adrian Gill, CEO of Property News, comments that anyone who is in the process of making a property transaction, whether they are buying, selling, renting, or letting, shouldn’t let any short-term uncertainty prevent them from making those decisions. The reality is, the fundamentals of the property market have been the same for the last decade despite the uncertainty we have faced in the past three general elections and the EU referendum. The property market is more resilient than most other investment strategies and will not change drastically overtime.
Another opinion comes from the specialist buying agent firm, Henry Pryor, who believes that prices could soften during the rest of 2017 and that it could become a buyer’s market, with property values eventually falling slightly. “The good news is that with near political paralysis we’re unlikely to see much more change to taxes or regulations both of which were high on most of the party’s manifestos. The bad news is that uncertainty will result in more people sitting on their hands and doing nothing.”
Simon Rubinsohn, of the Royal Institution of Chartered Surveyors, also believes that a period of uncertainty will only last short-term - and beyond summer, the property market might pick up. With the initial 2.3% drop in sterling against the dollar and 1.4% drop against the euro from the election, Rubinsohn further comments that expecting a weaker pound may lead to more foreign investment in London, which could push up prices in the capital.
A dominant theme throughout the election showed the demand for change with the current living situation in the UK. With Theresa May still in office, the need to fix the UK’s ‘broken’ housing market is still a priority. The Conservative party revealed in their manifesto their ideas on how to fix the currently dysfunctional housing market, with plans to build enough houses to meet the demand. They pledged to build one million new homes by the end of 2020, with an extra 500,000 by the end of 2022. This increase in house building could lead to a slower rise in property prices. This will enable more people to buy homes or find affordable renting.
The plan to implement these changes and how to complete the needed construction is still unknown. Despite what is happening in politics, there will always be a need for housing and it is still a fine time to invest. For anyone who is thinking about making an investment in property, then any short-term uncertainty should not prevent you from making the right long-term decision for yourself.
https://www.buyassociation.co.uk/2017/05/19/theresa-mays-conservative-manifesto-property-review/
http://www.bbc.co.uk/news/business-40217301
