Over the last few days there has been much speculation about the next governing party with the Conservatives already putting forward their own argument to the Queen. Jeremy Corbyn, leader of the Labour Party, still believes that he can become Prime Minister and is looking to opposition parties to join him in voting down the Queen’s speech, which would rubberstamp a Conservative government. So, what is the short to medium term outlook for UK house prices?
Pause and reflect
In the immediate aftermath of the election it is highly likely that the UK housing market will pause and reflect on the future. Whether we see house prices fall back too far remains to be seen but there will likely be a lack of buyers in the short term. We could see sellers withdrawing their properties until “things settle down” but it is more likely we will see some consolidation at slightly lower levels.
The fact is that UK house prices have been drifting over the last few months in light of political concerns and the forthcoming Brexit negotiations. There has been no panic selling, no distressed prices and in reality, as we have seen many times, the UK housing market just seems to march on regardless. So, while you will see the doom and gloom headlines over the coming weeks there is no reason to believe that the UK housing market will fall back too far.
Whether we have a Conservative government or Jeremy Corbyn somehow manages to overturn the current situation there will still be massive supply issues for the UK housing market. This will need to be addressed, governments will need to invest money and this will need to happen sooner rather than later. So, at some point the supply/demand ratio will kick in and buyers will look to take advantage of short to medium term price reductions.
It was interesting to see stock market listed housebuilders and construction companies coming under pressure amid the political mayhem we see today. The only concern here is that short-term projects and contracts connected with the government might be delayed although they will likely be confirmed in due course. As we have touched on in the past, uncertainty is the bugbear of stock markets and property markets around the world because it means it is nigh on impossible to confidently calculate the value of any asset.
No need to panic
At this moment in time there is no need to panic with regards to house prices. In the unlikely event that Jeremy Corbyn is able to overturn the Conservative government he has promised to invest billions of pounds into the UK housing market. Some of his more “adventurous” spending plans such as privatising the buses, trains, electric companies, water and Royal Mail are unlikely to come to fruition when you consider the fragmented Labour Party. So, this would allay fears about a jump in UK national debt, although debt will go up in the short to medium term, and hopefully reduce concerns about the UK economy in the short to medium term.
Despite the left-wing leanings of the Jeremy Corbyn led Labour Party there is still significant support for the Conservatives who have more of a balanced/right-wing approach. In a worst-case scenario, with Jeremy Corbyn becoming Prime Minister, he would not have the power to push through some of his more controversial policies. In effect, whichever UK government eventually comes into power they will be muted to say the least – until yet another general election is announced. A recent poll suggested Labour is now five percentage points ahead of the Conservative party which is placing yet more pressure on Theresa May and her colleagues.