Property Market Hits the Headlines

03/06/2015

Property Team

How the property market has reacted to the unexpected election results

Property Market Hits the Headlines

The transitional period of a general election is marked as a time of uncertainty - particularly in the property industry.

Prior to the election, when Labour’s controversial ‘mansion tax’ was a very real threat, it was predicted, and subsequently proved, that the number of properties in the £2 million and above category coming onto the market would slow down. Following the Conservatives unexpected majority, The Telegraph was one of several titles to report that more than £100m worth of residential property in London was reported to have sold. With Miliband’s mansion tax off the table, increased prices and stock in the prime market are expected to continue as industry confidence returns.

Certainly, the latest statistics from the estate agent comparison site, GetAgent – reported in The Guardian and The Week amongst others – suggest that sellers with properties in this bracket are returning to the market.

The findings show that the number of houses listed for £2 million or more across the UK’s four most popular property search websites, Prime Location, Zoopla, Rightmove and OnTheMarket, has more than doubled since the general election, with an increase of 160% from 246 to 639 homes.

Movement can also be seen across the wider market with a 62% rise in new listings across all price brackets, as the number of homes listed increased from 5,093 to 8,269 in the week beginning 9 April.

The result has also been hailed as positive for the strengthened UK commercial property and investment market. The overall economic outlook remains favorable for office and retail asset classes, with low inflation and interest rates boosting an already attractive offering for investors.

However, the election result has not been entirely positive for the property market. Uncertainty over mansion tax may have been removed, but new uncertainty regarding the UK’s position within the European Union and the relationship with Scotland is likely to influence the sector.

Talk about the EU referendum has already begun, with swathes of debate across the UK and international media and #EUreferendum trending on Twitter on 22 May, according to itrended.com. For the moment at least, the consensus of opinion seems to imply that an exit from Europe would be unlikely. Yet until the results are in, the mere possibility of Britain extracting itself from the EU is likely to dampen the economy by slowing down decision-making processes while businesses and individuals wait for clarity. This will particularly affect the property market as international companies are likely to want to be sure that their ‘European’ headquarters will remain in Europe.

As the newly elected government focuses on strengthening the economy over the coming months, it will be looking to increase both consumer and business confidence across the regions as well as in London.

The property market in the capital has experienced exceptional growth, but the Conservatives will need to deliver on their promises of creating a balanced economy that sees regeneration and investment in the regions. Cluttons’ recent UK Commercial Property Market Outlook - covered by Property Wire amongst others - suggests that demand for office space is improving in most locations and particularly in Bristol, Birmingham, Leeds and Manchester, where strong demand is matched by a diminishing supply. The report also predicts that overseas capital will continue its migration beyond prime and core over the coming year. The new government’s promise of devolved powers and budgets – if appropriately executed – could help regional property markets to thrive.

Whilst the outlook is positive for both the commercial and residential property market, the government’s controversial plan to extend the right to buy policy to over 1.3 million housing association tenants attempts to address the housing shortage – one of the major challenges facing the newly elected government.

It is, of course, far too early to tell how the property market will fare under the new government. However we can be certain that all things property are set to continue hitting the headlines throughout the next five years.

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