West London Business-member Knight Frank’s initial reaction to the UK General Election result.
Liam Bailey, Global Head of Research at Knight Frank, said:
“The Conservative Party has won a majority of approximately 80 seats in the UK general election. As a result, the UK is likely to leave the European Union on 31 January, with a vote in Parliament and a Queen’s Speech expected before Christmas.
“This will, for the time being, end the uncertainty of a no-deal Brexit and pave the way for the release of some of the pent-up demand that has built-in property markets in recent years. The extent to which this translates into transaction activity in the short-term will depend on the size of the pricing expectation gap between buyers and sellers.
“Supply is likely to rise as political uncertainty recedes and private and public spending stimulates the UK economy. This will put downward pressure on prices, however, some vendors may expect a bounce in prices, which may create a stand-off between buyers and sellers as the market re-prices.
“A shortage of supply in the lettings market may be further exacerbated as owners attempt to capitalise on any perceived ‘bounce’ and list their property on the sales market, which would put upward pressure on rental values.
“Uncertainty over future tax changes in the Budget, which is scheduled to take place in February, may prompt some to accelerate plans in coming weeks.
“The Party has said it will refocus its efforts on homeownership, particularly for first-time buyers. Though the manifesto reiterated the Help to Buy Equity Loan Scheme would be scaled back in 2021, subsequently ending in 2023, it pledged a review of methods to support homeownership follow its completion.
“Meanwhile, interest rates are likely to begin a gradual process of normalisation in 2020 as Brexit risks fade, which could mark the end of a period of ultra-low mortgage rates, which is something borrowers may factor into their decision-making.
“The pound rose against the dollar on news of the election result – from the $1.30 it was trading at before the result to around $1.34 – this upwards trajectory could begin to encourage overseas buyers into the market before any further erosion of their buying power.”
Stephen Clifton, Head of Commercial at Knight Frank, said:
“Real estate decision-makers have long craved greater political certainty, and this morning, that is the headline they have woken up to. We expect this clearer direction for UK politics to empower corporates to dust off expansion plans, developers to commence new schemes, and investors at home, and abroad, to quickly buy into what now looks like a very attractively-priced real estate market. 2020 will, therefore, be a much more active year on all fronts, as the UK reconfirms its status as one of the world’s few truly global real estate markets.”