How will the UK’s General Election affect the property market?

The snap election is affecting all kinds of industries, with economic predictions more uncertain than ever. House price growth is definitely slowing, but is this because of the General Election on 8 June 2017, or down to something else?

The housing crisis is a political hotspot, and a key issue for the politicians now campaigning. However, a new report by Nationwide suggests that the election will actually have very little effect on the UK housing market.

Prices have dropped for the third month in a row, for the first time since 2009. They’ve landed at an average of £207,699 across the country. Nationwide’s report suggests this is down to much wider effects than the election.

Robert Gardner is the Nationwide’s chief economist and compiled the research data. According to him, the slowing down of house price growth is more to do with the inability of buyers to accommodate any more rises, rather than anything else.

There have been many years of double digit rises in housing prices, and as traditionally house buyers have been unaffected by general elections, it’s more likely a natural slowdown of the market.

“Housing market trends have not traditionally been impacted around the time of general elections,” said Robert Gardner. “Rightly or wrongly, for most home buyers, elections are not foremost in their minds while buying or selling their home.”

There are many pressures on buyers and sellers, not least the fact that inflation has far outweighed growth in salaries for many years. In 2016, although it was feared the Brexit vote would impact the market, it was actually the new Stamp Duty charges that caused a slowdown in activity. This is still being felt today.

Mortgages are dictated by how much lenders are prepared to lend. Buyers are coming into the market knowing the very upper limit they can stretch to, meaning there is just no room for negotiation on property prices. This is forcing the slowdown in house price growth as people are just not in the position to go and borrow a bit more to meet a higher asking price.

The annual growth rate has slowed down to 2.1 per cent, which is the lowest level in approximately four years. However, it’s predicted that these prices will rise by about two per cent during 2017, as there is a shortage of housing on the market. New homes aren’t being built at the rate they are needed, which will force prices up again.

Samir Salya

Samir Salya is the Chairman of Reign Holdings and is involved in real estate and construction within the UAE and UK. Samir holds over 20 years of experience in executive management, business expansion, performance improvement, sales and marketing.