What does the snap election mean for the housing market?
When you’re writing an article, it definitely pays to glance at the ‘Breaking News’ before putting pen to paper.
In this case, I now write this piece on the morning that Theresa May has called a ‘snap’ General Election for the 8th June – at present this is predicated on her getting a two-thirds majority in the House of Commons but it seems like the Labour Party will support her, and I can’t imagine there’ll be another political party in Westminster who won’t relish the prospect of an electoral battle over the course of the next five weeks.
Indeed, judging by the opinion polls, you might have thought it would be the Labour Party who would be least keen to put their fate in the hands of the British public, and one can only sense that Jeremy Corbyn et al think they can achieve a political earthquake the same as delivered by one Donald Trump last year. However, the Labour realists – particularly those with slim majorities – might be considering whether a General Election five weeks away is really going to be a good option for them.
Quite bizarrely, given their near destruction in 2015, it could be the Liberal Democrats who gain most from this early election call. Clearly, they will be doing all they can to focus this election on Brexit, and one suspects they are already figuring out how they can align themselves with the 48% who voted ‘Remain’ last year, plus those who might well have had a change of heart since last June’s EU referendum.
While there will be many Leave Conservative MPs who have convinced themselves that the country as a whole has accepted that result, I suspect they could be surprised at the support the Lib Dems might garner from taking this approach, especially if they do hold out the prospect of a second referendum, whether that might be on the ‘deal’ arranged with the EU, or indeed on actually leaving the EU in the first place.
So, what does all this mean for the housing market? Well, at a time when RICs published its latest monthly survey recently which bemoaned the low levels of property coming up for sale, then a General Election is probably not going to do any of us many favours. Those who have been around the market during such periods – and let’s not forget we’re only talking about two years ago for the last one – will know that political uncertainty can be a real brake on activity levels.
Which might make the housing market – over what is traditionally a relatively busy period – even more subdued. Certainly agents we talk to are not exactly dealing with a glut of properties on their books anyway – issues such as the high cost of stamp duty have had a serious impact, not just for those existing homeowners who feel they can’t afford to stump up this money and instead seek to spend that on their existing properties, but also of course for purchasers – especially landlords – who are having to factor in the sizeable extra stamp duty charge. Perhaps, understandably, transactions are not exactly flying across the completion threshold.
Add in the General Election and I suspect even more potential vendors and purchasers will be adopting a ‘wait and see’ attitude over the coming weeks. Even if the result looks inevitable from the polls – a Conservative Party win with an improved majority – we all know that the polls can get it spectacularly wrong and we are dealing with a much-changed political landscape where people might well change their voting preferences from those they made two years ago. Now of course this might work in Theresa May’s favour rather than against her, and the question of Jeremy Corbyn’s leadership, and his status as a potential PM, will undoubtedly be raised repeatedly but we might still see some noticeable shifts.
As mentioned the Lib Dems might pick up disgruntled Remain votes, and what of UKIP – given the result of the EU referendum and the perception that it is a one-issue party where the issue has been resolved, will we see its support fall away and, if so, who will be the beneficiaries of those votes?
The next five weeks are an intriguing prospective if you’re a fan of political discourse and General Elections themselves, however from our housing market perspective I suspect there will be many wishing that Theresa May had stuck to the fixed five-year term. What we can say is that housing is likely to play a major role in the Election – indeed in his first interview post-Election announcement Corbyn mentioned this – and that every manifesto will have something interesting to say on how the housing market can be ‘fixed’.
Unfortunately we are all likely to be treading water while we await the outcome of the Election and to see how the winning party might put its plan into action.