How will the general election affect the property market?

on Jan 20, 2015
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In May, the British public will go back to the polling stations for the general election, as we vote in our next government. However, while the political future of many MPs will be at stake, the effects of the vote can influence other areas, of which the property market is one. 

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So how will the property sector be affected by the general election? We take a look at the possibilities. 

Pre election

Uncertainty reigns in the run up to any election, with people worrying about how the coming to power of any political party will affect them. And with Labour’s mansion tax proposals having left many unsure about how a change in leadership would affect housing policy, the first half of the year is set to see a slowing in market activity. 

The National Association of Estate Agents (NAEA) said that the impending election will facilitate a slowing of the market in the first few months of the year with sales falling away, but added that it will only be temporary. 

Its managing director Mark Hayward said: “A general election will always cause uncertainty, whichever party is likely to come in to power and with the housing market being based solely on sentiment, any uncertainty may result in a temporary lull. 

“However, we don’t believe this will have long-lasting implications on the market.”

A lull won’t be bad news for everyone, though. It’s expected that with fewer people buying, there will be far more renters in the market, so landlords can expect to see an increase in activity throughout the second half of the year. 

Post election

Following the election, sentiment should start to pick up again in the second half of the year. Although demand is likely to be falling in the first half of the year – 70 per cent of agents are reporting falling demand at the moment, we should see it pick up pace again from late summer.

For the year as a whole, the market will be far slower than last year, largely because of the uncertainty in the early months. However, as confidence starts to rise again, the year should rebound, and CBRE expects that by the end of the year the market will have experienced healthy price rises of six per cent.

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