The UK housing market can expect a surge in sales and rental activity across Britain after Boris Johnson’s Conservative party secured a resounding victory in the general election, property experts say.
By 5am local time on Friday, the Tories went over the threshold of 326 seats that are needed to form a government. By 730am local time, with just two constituencies to be declared, Conservatives secured 363 seats versus Labour’s 203.
While the pound hit the highest level against the US dollar (GBPUSD=X) since June 2018 and up by 1.7% against the euro to €1.2063 (GBPEUR=X), other sectors, such as property, have been heralding the Conservative victory as a massively positive.
“The property market will be one of the main beneficiaries of Friday’s decisive General Election result,” said David Westgate, Group Chief Executive at Andrews Property Group in a statement.
“Such a conclusive victory for Boris Johnson has the potential to turbocharge the property market and get it out of its current rut. The certainty that comes with a 5-year administration will create confidence and bring back the aspirational buyers and sellers that have been lacking since the EU referendum result.
“For three years the property market has been gripped by political uncertainty and deadlock but now it can finally move on. There’s every chance we are now at the beginning of a market cycle that may not peak until 2027 or beyond, with growth of around 4% a year.
Prior to the general election, Johnson as well as his predecessor Theresa May failed to get a Brexit deal through parliament due to the lack of seats to secure support.
But now, with a significant majority secured, Johnson can push through a Brexit deal or trade deals without worrying about gaining support from some politicians from other political parties.
That also means a move away from relentless uncertainty that has been stemming investment from businesses into the UK as well as freezing growth or movement across industries, like property.
Now, experts say that more clarification over the future of Britain will improve confidence and take the plunge in buying and selling property as well as allow companies to unlock investment.
“While the government’s track record of late has been fairly admirable with some 241,000 new homes delivered this year, there’s always room for improvement, and now the election dust has settled we should hopefully see an unhindered route to delivery and a positive impact on social housing given that it is linked via S106 agreements,” said Michael Stone, founder and CEO of Stone Real Estate.
“We’ve seen many big housebuilders operate on a more hands-off basis of late, largely due to a lower rate of house price growth and a fear of financial underperformance in tough market conditions. However, the new build sector has actually been the silver bullet against Brexit uncertainty with those opting to enter the fray rewarded with consistent levels of buyer demand and buoyant sold prices to match.
“With things only about to get better, the new build sector can expect a busy time over the coming year as pent up market apprehension surrounding our political landscape is relieved to a degree, and more homes are built, more homes are bought, and market sentiment receives a well-needed boost. ”
London ‘should lead the way’
Property experts, especially in the luxury housing market, say that the Tory win will stimulate the market.
“Forget political alignments for the minute, as we finally have a sense of certainty on which we can move forward as a nation, and while the curtain is far from falling on the rollercoaster that has been our European departure, we should see a fair degree of positive property market stimulation as we enter into next year,” said Marc von Grundherr, director of London-focused estate agent Benham and Reeves.
“The sluggish 1% annual rates of house price growth that have plagued the market for the last few years should now give way to a far healthier three to four percent.
“It may take time to reverse the more negative trends we’ve seen across London, however prime central London, in particular, should now lead the way with some very healthy levels of activity and price growth.”
Mark Pollack, director and co-founder of estate agent Aston Chase also emphasised the “enormous boost” on the London residential property market post-election.
“With Boris Johnson’s victory we now have a greater level of certainty surrounding the outcome of Brexit affording a great sense of relief and renewed confidence in the knowledge of a hopefully more stable political future.
“With the outcome of the election now determined and a working majority the government can now progress with the Brexit negotiations and we expect that this will be the catalyst for renewed confidence in the London property market from both UK end-users and from international investors from across the globe."