On Wednesday 3rd May Parliament dissolved, as Politicians vacated their seats and once again returned to their constituencies to canvas votes for the general election on June 8th. It will be almost a year to the day that we were voting on Brexit, a vote that has set in motion a series of events that has left markets nervous, and rocked confidence in all sectors, property included. Or has it?
For us as a company, the Brexit result saw a large influx of foreign investors who wanted to take advantage of the drop in the value of Sterling, identifying this as an opportunity to enter the UK property market at a discount (as the value of the pound dropped against the value of all major currencies). This interest continued, and with economic data for the UK showing healthy signs, the market in off-plan property has continued to move forward. However, given the drive by the incumbent Government to pursue a ‘Hard Brexit’, and the recent announcement of a snap election, market activity has now been impacted, albeit only slightly.
In our view, short term market sentiment can indeed be driven by political events, although investors should look beyond any noise as politicians hit the campaign trail, and keep focused on their own long term goals. In many cases, as we have seen throughout events in recent history, these slight interruptions can in fact be opportunities to enter the market at better levels.
Previous events also suggest that the market prefers a win for the incumbent Prime Minister, as voters know what to expect. Given that Theresa May is likely to win with a very comfortable majority as the lack of credible opposition makes this almost inevitable, one suspects that post June 8th, the world will continue to spin, people will continue to work, and the lack of housing in the UK will continue to be a problem, meaning pressure on prices and rental figures will remain for the foreseeable future.
In our opinion the election will probably just mean less transactions as people sit and watch, but once Theresa May walks back into Number 10 with a greater majority, the result that most pundits predict, then the markets – property included – will continue to push on as confidence grows that Theresa May, with a strong Mandate from the public, can deliver a Brexit that places the UK in the best possible position.