Now that the dust has settled following the Prime Minister’s surprise announcement of a July 4th General Election, we look as what this decision means for the property market.
After a steady market over the winter there have been signs of a spring bounce just lately. More sellers have been listing their homes for sale, and buyers have been buying, especially where properties are well priced.
Property prices seem to be holding up well overall, according to recent stats. The latest Nationwide House Price Index says that, even after a small monthly fall, they rose 0.6% over the last year. The Halifax House Price Index says they rose 1.1%.
The prospect of an interest rate cut sometime soon has also added some spice to the market.
Then the 4 July general election was announced pretty much out of the blue – with most people expecting it to be in the autumn – and put a whole new complexion on things.
So, what does the upcoming general election mean for the market?
History tends to show us that people are cautious about making any big decisions at general election time.
But it’s worth remembering that as we move into the summer (let’s hope!), the market is rarely at its busiest anyway. People are too busy counting down the days until school’s out and they can get away on holiday.
So, maybe the market will be a bit drowsy over the next few weeks. But that’s only to be expected anyway.
A big factor is probably the interest rate cut
Many experts have been predicting interest rates to be cut for a few months now, and for that to be the start of a downward trend in the cost of borrowing. Some would have bet their houses on it being cut at the next Bank of England meeting on 20 June. With that being just two weeks ahead of the election, it seems unlikely the Bank will make a move then.
While we could be wrong, an interest rate cut probably won’t happen until the Bank of England has its subsequent meetings on 1 August or 19 September.
That means some buyers might take a ‘wait and see’ attitude.
But even before a rate cut, mortgage lenders are being very competitive in the market for buyers who want to buy now.
The fall in inflation, to just 2.3% last month, might also be relevant. Some potential buyers might feel they now have a little bit more disposable income to put towards moving house.
That brings us to the fact that sentiment is very important in the property market
Many homeowners, and would-be homeowners, will be looking towards what the main parties might promise for the housing market. Both main parties are pro-home ownership. Both say they want buying a home to be more affordable, and want to appeal to first-time buyers especially.
How will they achieve this, though? Will either of them offer voters any tasty titbits? Like a Stamp Duty cut or new help-to-buy schemes? No one knows yet. We’ll all need to keep an eye on their announcements over the next few weeks to find out.
Longer term, both main parties are promising a lot more new houses. How many get built could affect supply and so affect house prices in future.
The Conservatives promised to build 300,000 new homes each year back in 2019, but later decided to relax that target. Last year, The Labour Party promised to build 1.5 million new homes over five years if they get into power.
So, what should buyers do with the general election coming up?
If you’re looking to buy, it’s only natural that you’ll feel you need to tread carefully. But now could actually be a good time to make a move. Once the general election is over, and the traditionally busy moving period starts around September, more buyers could enter the market. There could be more competition for the properties that are for sale. Prices could even start to nudge up again. So now could be a good time to work out your budget, get your ducks in a row and see what’s on the market.
What should sellers do with the general election coming up?
Should you put your house up for sale now or wait until the autumn – or even next year?
Well, a long-held belief in the property market is that well-priced, well-presented houses (and flats) will always sell.
So, a wise course of action might be to take advice from a good estate agent. Ask them about what interest there is likely to be in your property and what a suitable asking price might be. You can then decide what’s best for you.
At the end of the day, there are more positives than negatives about the general election coming a bit earlier than expected. In just a few weeks, everything will be done and dusted.
There should be a lot more certainty about what lies ahead for the property market.
And that should benefit buyers and sellers alike.
To get your property related questions answered by experts contact us today.