Within 48 hours we will know the voting habits of the UK public although it may take a little longer before we know the make-up of the next coalition government. The property market has been headline news for some time now amid suggestions that investors are sitting on the sidelines ahead of the result. We are seeing doomsday headlines, we have seeing concerns aired about the future but behind-the-scenes the property market in the UK still remains very strong. What should we expect post the general election?
Markets always adapt
Whether we see a so-called “rainbow government” made up of one large party and an array of smaller political parties or there is a sudden surge for one particular party over the next few hours, markets have historically always adapted. The key to remember about any investment market is that markets and investors themselves dislike the unknown more than any other factor.
If Friday morning sees a worst-case scenario than the markets will adapt, if Friday morning sees a best case scenario then the markets will adapt because that is what markets do. They will adjust the perceived risk/reward ratio, they will look to the future and then they will place a “fair value” on each and every asset. If you think of investment markets, right across the board, as information exchanges this will give you the perfect scenario. Everybody is able to input their own opinions and views while markets, assets and prices adjust to the demand.
Home is where the heart is
It is worth noting that against a backdrop of increased austerity on one side, and increased UK debt on the other, all parties recognise that the value of your home is key to the future. The fact is that we all want somewhere to settle down, somewhere to call home and this is what politicians will need to address in the short, medium and longer term. If politicians are but a fraction good to their promises then we should see a significant increase in the number of new deals across the UK over the length of the next Parliament. Indeed the figure could be anywhere up to 600,000 properties!
We are also likely to see an array of help facilities for first-time buyers, government funding made more available not to mention a significant increase in social/council housing. The UK property market has been so successful over the last 30 or 40 years that in many cases prices have run away from the general affordability factor. Again, this is something which the next government will need to address.
It is easy to get carried away with the potential fluctuations in political power for the length of the next Parliament especially when you bear in mind that so-called minor parties will have a greater say no matter what happens on Friday. As normal, there are some extremely negative and doomsday scenario headlines grabbing the attention of inexperienced investors. The simple fact is that markets will adapt to any situation, correction, any known situation, whether this is the worst case scenario of the best case scenario.
Uncertainty is what breeds volatility, while on the other hand, knowledge going forward allows assets to be revalued, revisited and investors to plan ahead.