It is always difficult to predict the exact fallout that will occur when a major political event takes place, and, with the latest bombshell that is the recently announced “snap” election, the short notice involved makes things even trickier to figure out. However, the good folk at Liverpool Property Solutions, experienced managers of property in Liverpool, have seen it all before. See below for our predictions regarding the knock-on effect of the general election on the UK property market.
1. Slowing down The number of property transactions and the speed at which they take place is highly likely to drop significantly, as times of political uncertainty naturally cause caution. Many developments and sales will be delayed until a month or two after the election, when any new governmental agenda can be better understood and its results more correctly quantified.
2. Interest rates A more difficult element to foretell is the effect of the election on interest rates. There is currently no implication as to whether these will fall or rise, but this fact alone will serve to put potential buyers off taking any risks.
3. Government-led new build projects All major political parties have vowed to create large numbers of new houses, with promised amounts ranging between 100,000 (the Conservatives, who say that these will be “starter homes” for first-time buyers under 40), 200,000 per year (Labour, who claim that this will be achieved by 2020) and 300,000 houses per year (the Liberal Democrats). This reduction of buyer saturation should release some pressure on the struggling market.
4. Help To Buy / Changes to Mortgages Similarly, to the issues in #1, money lenders will become more cautious when it comes to approving mortgages, especially as there is the potential for tighter boundaries on the amounts they will be able to lend in relation to the relevant property value in the near future. The government’s ‘Help To Buy’ scheme will also be up for review, with the possibility of a reduction or cessation of the initiative. This eventuality would be likely to negatively affect the purchase of new builds, with a knock-on effect on the construction industry.
Overall, it is impossible to predict the implications of the upcoming election as an exact science. Policies such as those relating to home building could offer a much-needed boost to the market, and after a slow period where property managers and developers will be feeling their way, there is every possibility that the UK housing industry will boom once more.
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