What the general election result means for the London housing market?
Well, generally speaking, any period of political uncertainty tends to dampen activity in the property market. The UK housing market tends to follow seasonal trends, historically the summer months are the busiest period for the market. However, after an unexpected twist in the election result, I would be amazed if we don’t experience an unusually quiet summer period.
Political uncertainty naturally filters through to the confidence levels of potential home buyers. The more uncertainty the lower the level of confidence felt by those making the largest financial commitment of their lives. The last thing the housing market needed post Brexit was a hung parliament, if I’m being totally honest.
The housing market has been adversely affected by numerous increases in taxation in recent years. That has had a very tangible effect on the London housing market, where house prices are higher than the rest of the country. Property value has a very direct effect on up-front levies such as Stamp Duty. Also foreign investors have been dissuaded from investing in London by a raft of taxation changes. Although many will cheer the quelling of foreign investment into the UK’s property market, in my opinion that is also somewhat short sighted.
The good news is, the fallout from the recent general election is likely to be short lived. It always is. The fundamentals that underpin the capital’s housing market still remain strong. Unemployment is low and the cost of borrowing is still incredibly cheap.
In the years I have been involved in the London property market I have seen numerous peaks and troughs. In 2008 when the market crashed, it seemed like the British obsession with home ownership had all but died. Fast forward three years to 2011 and the market was back in full swing with double-digit house price growth and substantial increases in transaction volumes.
I would expect to see a very quiet summer period while the political dust settles and then I would expect to see a resilient end to the year. Ultimately, the public do not put their home owning aspirations on hold indefinitely. The longer the period of house buying abstinence the greater the bottle neck of demand further down the line.
Lourdes Estate Agents