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It’s coming soon….Thursday 4th July, the general election will take place in the UK. But how does the outcome of the UK general election have a significant impact upon the property market?
Well, it starts from changes to mortgage interest rates, to what can often be a real change in ‘purchasing confidence’. The political outlook has a direct impact upon the house prices right across the UK, whether we like it or not.
The political parties all submit their own economic proposals for moving forward, this has a direct affect on house prices. Taking into account items such as stamp duty, mortgage interest relief and any proposed housing supply initiatives that could change affordability within the property market.
The outcome of a general election again has a direct impact on mortgage lenders’ willingness to offer products after gaining insight into the availability of credit. Lenders are almost certainly guaranteed after an election to make new products available based on the new government’s economic and political risks. Changes are often made to loan-to-value ratios, eligibility criteria and changes to interest rates.
Anyone looking to purchase a home, whether its for a family home or as an investment property will often like to ‘wait it out’ until after an election as they make their own assessment on their personal finances, following an election. This can lead to changes in demand/supply and pricing.
There have seldom been ‘hung Parliaments’ but it did happen both in 1940 and back in 2010. In the unlikely event this were to happen where no single party holds a majority, it would most certainly lead to increased uncertainty across the housing market. There would be delayed decision-making and more than likely it would slow the housing market back down again.
Here is a graphic (below) we love from ‘Compare My Move’ that demonstrates the impact on UK house prices after an election.
House prices almost certainly experience a sudden dip, followed by an increase and stabilisation in the market, with prices starting to rise, depending on the specific measures introduced by the political party in power.
There is a varying impact on each nation within the UK following an election. Wales and Northern Ireland often witness the least amount of change by average house prices increasing around 1-2% following the election. With Scotland increasing prices around 2-3% in the 12 months afterwards, and England often seeing the biggest increase with around 4-6%.
Research conducted by Nationwide suggests that house prices can often behave differently based on which political party gets into government, which matches up with research from comparemymove.com.
A careful analysis of the market with guidance from a property professional is always the best option if you are considering selling your home straight after an election. It is thought that proactive sellers might be able to capitalise on the changes within the market, this is why seeking out professional property guidance is always time worth spent. They can aid you to make the best decision specific to your own situation. Be prepared to adapt your property plans, adopt new strategies and watch the market.
If you want to get in touch with our professional team, drop us an email on info@murraypropertyholdings.co.uk and we will be only too happy to have a chat.
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Email: info@murraypropertyholdings.co.uk
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