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Elections and the impact on the property industry

28th June 2017

Categories: Latest News

The political uncertainty following general elections is nothing new.  How this effects the property market is always interesting. 

Unfortunately, a hung parliament when no clear winner has emerged or majority established will often cause share prices to rise or fall most dramatically on the days following the election.  Thankfully, the stock market has not reacted particularly adversely since the election.  Furthermore, the strong recovery in the property market following the aftermath of the Brexit vote last year is still very much paramount in people's minds. 

When Theresa May announced the election at the end of April the country was looking very much towards a hard Brexit.  Two months on, with no deal agreed yet with the Democratic Unionist Party it is almost inevitable a much softer Brexit will materialise.  What is yet to emerge from the property industry is which way it will push over the next few months.

Knight Frank economist James Roberts stated in the Estates Gazette recently that he believed the City would benefit from the election result and that 'he would expect a return to more middle of the road economic policies, as these will be the easiest to push through parliament'.  Furthermore, he added, ‘this will benefit both the investment market and occupier demand for commercial property, particularly in the office and industrial markets'. 

All the main posts in government remain unchanged, however Jeremy Corbin and the Labour Party has clearly engaged with younger voters and more socialist ideals and a question therefore is ‘does the property industry need to engage more with the left?’  Some ideas that might come out of the Labour manifesto could include further expansion of the ‘Help to Buy’ funding scheme and possible reforms of the rental sector.  Any changes to policy however should not impact on viability.

I have discussed the result of the election with my peers and colleagues and it is generally widely agreed the result was not as unexpected as the referendum result, where the markets were taken by surprise.  The anticipated softer Brexit will possibly help reverse the decision of some major central London occupiers to relocate to Europe. 

However, a hung parliament will in all probability result in a further general election in the short to medium term.  Inevitably this will spell some uncertainty for the property sector.  How this will manifest itself is still to be seen although arguably nothing in UK property market has changed. 

Greater certainty will be achieved in the coming weeks with the commencement of the Brexit negotiations with the EU.  I think a good deal can be agreed in the tight timeline and clearly any further delay will only add to the uncertainty for the property industry.

I think what has been shown time and time again is that it is best to play the long game in the property industry.  There are always going to be factors and shocks that can result in immediate changes but over the longer term these are often averaged out with confidence returning to the sector making long term changes less pronounced.

Paul Palmer, TDA Estates Manager, can be contacted on paul.palmer@tedcltd.com

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