UK investment markets, including the property market, were surprised to say the least when an exit poll released straight after voting ended indicated a hung parliament. The exit poll suggested that the Tories would win 314 seats with Labour second on 266 seats. This would leave to Theresa May well short of the 326 seats required for a majority in the House of Commons. While we await confirmation of the outcome it shows the disastrous campaign undertaken by the Conservative party and the surprisingly upbeat tone from Jeremy Corbyn and the Labour Party.
Economic reality
For some time now there have been concerns about the lack of detail in the Labour Party manifesto with regards to spending promises. How would they afford to buy back the buses companies, trains, water, electricity and Royal Mail? How would they be able to afford to introduce free university education for the masses? At this moment in time it seems that concerns regarding Theresa May are more uppermost in the minds of voters rather than the Labour Party’s disastrous history with government spending.
Pound in freefall
It will come as no surprise to learn that sterling has reacted badly to the exit poll although historically they have not always been correct. However, to gauge such a major change in voting intentions, when you bear in mind the Conservative party were 24 percentage points ahead of Labour just a couple of weeks ago, is mind blowing. Surely the exit polls cannot be too far from the truth?
The pound is expected to fall to around $1.24 which is a major shift from the current level of $1.30 although potentially an opportunity for overseas investors. We all know that overseas investors have a healthy appetite for UK property and in particular the London property market. Whether London receives the bulk of interest in the short to medium term remains to be seen because it is hypersensitive to political change. Will overseas investors again run to the aid of the UK?
Has politics changed forever?
It seems that much of Jeremy Corbyn’s renewed support has come from the youth of today and in particular those looking to or currently attending university. He has invested a lot of time, money and effort into grabbing the attention of the young of today which would appear to be paying dividends. Many have a deep-seated hatred of the Conservative party and the Labour Party appears to be tapping into this while building on their growing support.
The fact that many first-time property buyers are struggling to climb aboard the property ladder and those looking for rental properties are struggling to afford rental demands has not helped the Tories. There is a growing belief that politics in the UK has changed over the last couple of weeks with Jeremy Corbyn, often seen as a comedy figure, now very much at the fore.
Update
Since we wrote this article it is been revealed that the Conservative party has 318 seats against 261 for the Labour Party. The Conservative party has already negotiated an “arrangement” with the DUP in order to put together a supportive government. There is already much anger regarding the various beliefs of the DUP and whether indeed this arrangement will last. The last thing the UK property market needs is more confusion and uncertainty at a time when Brexit negotiations are on the horizon.