The big news in the last month has undoubtedly been the announcement by Teresa May's Tory Government that a General Election will take place on June 8th.
Seen as either: opportunistic, given her commanding lead in the polls; or as an attempt to secure a clear and stronger mandate for the Brexit negotiations, either way it will create uncertainty, particularly given the recent track record of the pollsters.
History shows that General Elections have little effect on the property market other than in the immediate short term and we do not expect this year's vote to be any different.
The sales market at the moment is in an interesting state as it is characterised by an overall shortage of supply yet remains price sensitive. Property is selling but ambitious pricing can kill activity and the chances of a sale. The rental market has a little more availability on the supply side and, with a number of tenants now taking advantage of an improvement of affordability, is again price sensitive with tenants exercising greater degrees of discretion before committing.
The likely market picture over the coming weeks is one of subdued activity. A number of planned Government "initiatives" affecting the property market and the wider economy are now "on ice" and may not materialise as quickly or at all once a new Government is returned because of the pressures of negotiating our exit from the EU.
Politicians of all sides however are keen to ensure that the general strength of the U.K. economy continues. Whilst there are some growing inflationary pressures in the economy, this is against an extremely low interest rate environment and means that thoughts of imminent rises in mortgage rates have receded.
With overall wage increases running ahead of inflation, affordability has improved and there have been many reports indicating an increase in the number of first time buyers buying and taking advantage of low mortgage rates. The banks of mum and dad and nanny and grand dad are assisting with the provision of deposits, often releasing equity from their existing homes.
Our view is that the market remains sound both in the immediate and longer term. A period of price stability is inevitable and welcome but longer term growth is also certain as, despite increases in housebuilding numbers, there remains a higher level of underlying demand to supply.
As always, our team will be pleased to discuss your individual situation and advise on the best options available to you.
Michael Johnson
