When Theresa May called a snap election many were surprised that she was willing to take such a risk in the midst of the Brexit negotiations. Now that the dust has settled the situation is a little clearer because ultimately Theresa May simply wants to increase her parliamentary majority to pave the way for smoother Brexit negotiations. However, many people are now starting to ask whether property sales will be postponed until after the election and whether this snap election will have any impact on the property market in the short to medium term?
Under normal circumstances a government would call a general election well in advance of the voting day giving markets the chance to digest new information and find new levels. The snap election called by Theresa May effectively tightens this timescale but many believe it will have little or no impact upon the UK property market. True, there may be some uncertainty in the short to medium term but in just a few weeks we will know the make-up of the new government and the snap election will be history.
Supply and demand
Whether it is Brexit or the snap election the main issues impacting the UK property market at the moment are simple supply and demand levels. If for example sellers were to postpone any transactions until after the election then all this would do is reduce the supply and help to maintain prices. Potential buyers are unlikely to fall by more than those looking to postpone potential property sales so in effect the short to medium term impact would be negligible at best. Indeed, there is an argument to suggest that a withdrawal of sellers in the short to medium term could indeed push prices higher with less stock available to potential buyers.
It is also worth remembering at this moment in time Theresa May already has a majority in the House of Commons and the local elections are indicating an even greater majority come 8th June. So, while any uncertainty is not good for property markets to all intents and purposes there is relatively little uncertainty regarding the future government after 8 June. What kind of majority Theresa May will hold is a totally different matter!
UK property prices
When you bear in mind there have been a number of shocks in the UK over the last 12 months including Brexit and the ongoing snap election, prices are now beginning to stabilise. It does look as though many investors are ignoring the ongoing snap election and looking to take advantage of selective property price falls over the last 12 months. We also need to bear in mind that UK base rates are unlikely to increase significantly in the short to medium term especially in light of Brexit uncertainties during the two-year negotiating period.
So, we have investors taking advantage of recent selective property price falls, extremely low finance costs, growing demand for UK property and a lack of suitable stock. In the grand scheme of things the election will always be in the back of the minds of many investors but ultimately it looks like a “done deal” in favour of the Conservatives. As a consequence, perhaps this snap election will have limited impact upon the UK property market?