Britain will be once again be returning to the polls. Theresa May has called for a snap General Election in a couple of months’ time, in an effort to secure support for Brexit.
So what will the election mean for the London property market? We’ve looked at how elections have historically affected the market, plus asked our resident property experts for their opinion.
But first, here’s everything you need to know about the upcoming election…
When is the election taking place?
The General Election will be held on Thursday 8th June 2017.
Theresa May won the vote in the Commons to hold an early election with an overwhelming majority of 522-13.
Why do we need an election?
Mrs May has repeatedly insisted that she wouldn’t seek a general election before the scheduled 2020 poll, so why the change of heart?
In a statement outside Downing Street, May justified her decision, stating that a snap election is the “Only way to guarantee certainty and security for years ahead”.
She made it clear that, “Division in Westminster will risk our ability to make a success of Brexit.
Currently the Prime Minister holds a huge lead in the polls, and in her eyes, a win will not only be a chance to show unity but also strengthen her hand in Brexit negotiations.
How will the General Election affect the London property market?
As we’ve seen in previous years, there’s a clear correlation between General Elections and sales transactions, so we expect to see a slight dip in transactional volume over the next couple of months due to uncertainty surrounding the upcoming vote.
The graph shows the sales transactions in Wandsworth, south London, Redbridge, east London, and Westminster, central London over the past ten years. Westminster generally leads the London property market, so what happens here tends to ripple out to other boroughs. We chose Redbridge and Wandsworth to give a broader view of the London market.
As you can see, all three boroughs experienced a drop in activity before the last three elections and then a spike of activity post-election.
Portico’s Managing Director, Robert Nichols, has commented on the graph, stating, “I think the effects on the market will be much less pronounced this time around than they have been in previous elections, and this is because of the short run up to the vote; instead of the usual six months, we only have 7 weeks until the polls.
Currently, transaction volumes, or the number of homes being bought and sold in the capital, are critically low - in fact, there were only 55 properties sold in the whole borough of Westminster in February this year according to Land Registry data.
The drop in transactions is in part explained by a big bounce in sales in the run-up to April last year, when a change to stamp duty taxes came into effect, followed by an immediate fall. Since then, volumes have remained critically low, and Theresa May’s decision for a snap general election will further subdue market activity.”
Scroll down for the full data.
Bounceback after the election
As you can see from the graph, activity tends to pick up after an election when certainty in the market is restored. The highest transactional levels are typically in the three months following an election, so this is a good time to have your property on the market if you’re thinking of selling.
When we look at the last election, Wandsworth and Westminster experienced a 28% average increase in sales transactions in the three months post-election, and Redbridge saw an even bigger 34% average jump in activity.
I’m thinking of selling - what should I do?
If you’re trying to sell your house or your house is already on the market, you may experience a slight drop in interest over the next couple of months as the more hesitant buyers wait until the outcome of the Election before making a decision.
The population is growing, the job market is buoyant, and people are still coming to live in London — so the demand is certainly there. It may be a case of being patient and ensuring your house is presented in its best possible condition. Activity will pick up post-election.
If your property is vacant and you are waiting for a sale, another idea may be to enlist it on Airbnb and earn until you sell. Find out how much you could earn on Airbnb here.
I’m thinking of buying - should I hold off?
Portico’s Regional Sales Director, Mark Lawrinson, says: “If you’re thinking of buying, so long as you buy in an up-and-coming area it’s likely to be a good bet. If an area is experiencing infrastructure investment and consequently regeneration, it’s likely to benefit from a boost in both rental yield and capital appreciation - even in a weak market. But most importantly, when buying a property to live in, try to think of it as a home first and an investment second. If you’re planning to live there for the long-term then little bumps in the market shouldn’t affect you.
London is a resilient city - as we’ve seen time and time again - so if there is a price correction over the next few years, it will be insignificant if you plan on being there for another ten. Ultimately, no one can predict the market, but a stable government and a visible plan for how Brexit will pan out will instil some much needed political confidence, which should have a positive effect on the market.”
How do you think the election will pan out? Let us know in the comment box below! Or, give us a call on 0207 099 4000 if you're thinking of selling or letting your property, or if you'd like a free property valuation.
London Sales Transactions in Wandsworth, Redbridge and Westminster from January 1995 - February 2017 (all historic publically available Land Registry data). General Elections have been highlighted in pink.
The blue section from March 2017 to May 2018 is Portico's forecast.
Average Property Prices in Wandsworth, Redbridge and Westminster from January 1995 - May 2018 (all historic publically available Land Registry data)