Please enter your username and password here:Forgot Password?
Please enter your details here:or Login
Provided by Select Property
24 April, 2015
Find out what's happening to the market and how your property will be affected by the election result.
On May 7th, Britain heads to the polls to determine who will form the next government – so what's going to happen to the property market?
At the time of writing, the opinion polls are close and not a single political expert can comfortably predict which party will win the most amount of seats, or those that will form a government. However, throughout the campaign trail, housing and property has been one of the mostly hotly debated topics, with all the major parties having clearly defined proposals should they move into Downing Street.
Looking at the market now, it would seem that buyers, sellers and investors have not been put off by the impending election, as confidence is rife. Demand from buyers was up by 22% in March, as prices grew by 0.9% across the UK and are now 5.6% higher than they were in March 2014.
But what could happen to the market, and your property, once the polling stations shut and the votes have been counted?
Expect a surge in activity following the election
Looking at the last General Election in 2010, a 23% increase in property sales was recorded in the three months following David Cameron's victory and the subsequent formation of the coalition government compared to the three months before the election. Furthermore, sales in the last three election years (2001, 2005 and 2010) grew between 8.9% and 16.7% in the three months after the result, compared to the same period in non-election years.
As some home owners and investors feel more confident in making a move in the market, it's not unlikely that a similar surge will happen from May 8th onwards.
Interest rates may actually fall before they rise
Firstly, it's worth remembering that a new government can't suddenly decide that they want to raise or lower the rate of interest. But, ultimately, any new government will create economic uncertainty and their actions whilst in power, whether they overspend or bolster austerity measures, will have an impact on interest rates in the long term.
Interest rates are currently low and they have been even before the last government was formed. They've been at 0.5% since 2009 and this, arguably, could be just one of the reasons why more people have been investing in buy-to-let property in recent years.
So will they rise before the end of the year? Well according to Andy Haldane, the Chief Economist at the Bank of England, they're just as likely to fall next as they are to rise. When asked earlier this year what would happen if the rate was set by a computer algorithm, Haldane said that "the optimal path for interest rates would involve them being cut in the short-term towards zero for around a year".
Buy-to-let investment to continue to be popular
The UK buy-to-let market is thriving right now. Rental rates in the private rented sector (PRS) were 10.2% higher in the first quarter of this year than they were in 2014, as the number of valuations carried out on buy-to-let properties grew by 54% in March 2015 compared to the previous month.
And investment levels are set to continue for the rest of the year, with factors such as April's pension freedoms set to create a new generation of landlords. More than 50% of the over-40s are considering or already have a buy-to-let investment for their retirement, as they're confident a property in the PRS will deliver them higher, monthly returns than a traditional annuity would.
Key policies unlikely to have a huge impact on your investment
Each party, as outlined in their manifestos, have different ideas for the housing and property markets. But the vast majority are unlikely to have a significantly detrimental effect on your property investment.
Some of the most discussed policies:
Select Property Group's latest investment guide, 'The future of the student property investment market', provides an overview to the UK's best performing asset class, one that is non-cyclical and, thus, will be completely unaffected by the General Election.
About | Useful Links | Global Media Partners | Media | Advertising And Sales | Banners And Widgets | Glossary | RSS | Privacy & Cookies | Terms And Conditions | Editorial Policy | Refer To A Friend | Newsletters | Contact | Site Map
Important Notice: Wolters Kluwer TAA Limited has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments. © Wolters Kluwer TAA Ltd 2017. All rights reserved.
The Expat Briefing brand is owned and operated by Wolters Kluwer TAA Limited.