However you voted in the December 2019 General Election, you probably weren’t expecting the outcome we got.
The pundits certainly didn’t forecast such a landslide victory for the Conservatives. But how will it affect the property market?
The most immediate difference is that for the first time in years, the governing party has a substantial majority. This means it will be much easier for them to pass legislation without relying on minority parties to prop them up. As some manifesto pledges were aimed specifically at boosting the housing market, and with the UK property market having been pretty sluggish since last summer, this could be good news.
How Has the Property Sector Reacted?
Some industry experts agree that such a decisive victory for the Conservatives will not only bring stability and certainty to government, but also be a shot in the arm for the property market. They assert that previous ongoing uncertainty made many people cautious and, whether buyers or sellers, this change will encourage them to make their move.
Other experts are sounding caution, saying if there is a bounce in properties becoming available it might depress prices, as supply becomes more plentiful. However, there’s a strong perception overall that prices won’t fall any lower and that as the market becomes more stable increased demand will start to push them up again.
Criticism has been levelled at the lack of action on reforming stamp duty for UK buyers, which was not included in the manifesto despite Boris Johnson talking up changes prior to winning the Conservative Party leadership election and succeeding Theresa May as prime minister.
A pledge which has been welcomed is the intention to ensure longer-term fixed-rate mortgages. We are seeing an increase in ten-year fixed-rate mortgages already, but this concerns lifetime fixed-rate deals. The idea is that it will protect customers from interest rate risks over the long-term and make homes more affordable. It’s already working in other European countries, including France and the Netherlands.
In those countries, however, they have teamed long-term fixed-rate mortgages with low early repayment charges, giving homeowners the best of both worlds. Experts have pointed the finger at high penalty costs for switching as a major element preventing the introduction of longer-term fixed-rate deals, so it will be interesting to see how this plays out. The point has also been made that it’s unclear how the government might implement its pledge.
The Impact of Brexit
Something the outcome of the general election did guarantee was Brexit. Uncertainty over whether Brexit would happen was cited as a reason for buyers making low offers and withdrawing offers. The UK has now left the EU and entered the transition period, and some experts believe this new stage will bolster stability.
Overall, it seems the significant majority now held by the government is considered by experts to be good for the UK property market. There’s an anticipation of stability and control, and with Brexit having been accomplished, some feel things are looking up.