How is the result of the General Election impacting on the property market?
By Guest Blogger on 27 Jul 2017 in Industry News
By Ryan Weston, of Just Landlords
It’s now over a month since the unexpected result of the General Election.
In a chastening night for the Conservatives, Theresa May was left in tears, Jeremy Corbyn was left jubilant in defeat and Housing Minister Gavin Barwell lost his seat.
During the ensuing chaos, Prime Minister May has managed to form a pricey coalition with the Democratic Unionist Party. Despite this, there have been several concerns raised about how this could impact on the property market moving forward.
I attempt to piece together the puzzle.
There is little doubt that the result of the Election, and subsequent cobbling together of a coalition, is a poor outcome for the housing and rental markets. A period of stability was required, but instead, uncertainty is set to reign.
Already, there are signs that housing stock is falling. The most recent report from HouseSimple.com indicates that new listings fell by 1.9 per cent month-on-month in June. What’s more, of the 100 towns and cities covered by the analysis, 81 per cent saw falls during the month.
As Alex Gosling, CEO of HouseSimple.com observes: “The property market was hoping for a downpour of new stock in June, but the Conservatives crawling over the line failed to deliver the injection of confidence the market needed, and put paid to any chance of a late Spring bounce. Price growth has stalled, and sellers, it appears, are choosing to stay put, rather than accept marketing their properties at a lower price then they might have done a few months ago.”
The hung parliament and subsequent coalition also comes as a blow to those who wanted to see imminent changes to existing legislation and further changes come into force.
Prolonged confusion about who is leading the country has left measures such as no confirmation or date for the ban on letting agent fees. This is leaving investors and tenants waiting, and it’s creating a lack of confidence in the market.
Add to this calls for change to the Right to Rent scheme and Stamp Duty failing to become a priority in the near future – and the frustration grows further.
What about Brexit?
It’s likely that any uncertainty over the political future of the UK is due to be exacerbated by concerns surrounding the on-going Brexit negotiations. The rights of EU expats residing in the UK are yet to be secured, leaving many property owners both here and abroad in limbo, waiting for news.
Russell Quirk, Chief Executive of eMoov, stated: “Political instability breeds procrastination on the part of home buyers and sellers, and for over a year now we have seen the effects of that on volumes, if not so much prices, as a consequence of the European Union vote and then the snap general election.
“I suspect that the housing brief will take a back seat now, despite politicians’ promises in recent weeks, given the combined weight of negotiating Brexit, stabilising our economy, button holing political support on every vote, and inevitably, campaigning again for the next poll.”
In addition, the Brexit uncertainty is having a detrimental impact on student numbers and thus, the student rental market. Danielle Cullen, Managing Director at StudentTenant.com, said: “It seems that post-Brexit, some EU students don’t want to study in the UK. A year on, there’s still uncertainty for EU students. Naturally, they’re worried about how it could affect them and they’re not applying to our higher educational system as a result.”
Is there room for any optimism?
Putting the negativity to one side, there are still signs of a bright outlook for the housing and rental markets.
HouseSimple.com’s report revealed that listings in London increased by 5.3 per cent in June and more prominently, by 20.6 per cent and 18.7 per cent in Lichfield and Hartlepool respectively.
It’s also likely that the result of the General Election is not the only reason for a slowdown in housing stock. Gosling went on to note that: “The housing market overheated and it was inevitably going to cool at some point.”
The current climate could also present a great opportunity for savvy investors to pick-up a bargain. As Gosling concludes: “Homeowners should see this as a good climate to sell as long as they price correctly.”
An eventual forming of Government could also provide belated good news for the market, with measures already in force likely to be upheld – despite some proving unpopular.
Adam Challis, head of residential research at JLL, noted: “Importantly for housing supply, the policy direction as set out in the White Paper on building more homes across the range of tenures, will be upheld. Supporting new methods of delivery, such as Build to Rent and off-site construction are also emerging and exciting sectors that will expand the pace of housing delivery.”
What about the future?
Of course, the political and economic challenges facing Britain in the short-term make it extremely difficult to make any concrete long-term assumptions.
However, rents were found to have risen by just 1.1 per cent year-on-year to June, suggesting that this sector is pausing for breath. This could offer tenants more peace of mind, albeit before any ban on agent fees is formally announced.
Whether buying or renting, it’s imperative to remember to conduct thorough research and to be sure before committing. There are still good investments to be made and tenant demand is still at a record-high level.
For what is around the corner, we will have to wait and see. As Challis concluded: “It will be crucial that the new champions of housing market policy in Government can reaffirm commitments to the current policy direction rather than to create further disruption or uncertainty.”