In the lead-up to last June’s EU referendum there were many doom-laden predictions about dramatic house price falls if Britain voted to leave. This, however, never came to pass after the Leave side unexpectedly won.
While the property market took a few small shot-term hits as people reacted to the result, it largely remained robust and resilient. House price growth was steady and consumer sentiment soon recovered after an initial lull.
Rather than drastic falls in the price of people's homes, the opposite happened - they started to rise in value. All talk of property prices falling off a cliff had been shown to be hyperbolic in the extreme.
Despite external political and economic uncertainty, the housing market took a business as usual approach in the aftermath of the historic vote. What’s more, the fundamentals remained the same – demand comfortably outstripping supply, low interest rates, tougher lending criteria – which ensured that stability was the name of the game.
We’re now a fair way in to 2017, and the predictions before the start of this year – with many experts forecasting house prices rises of between 2-3% - appear to be pretty accurate. Demand continues to outstrip supply in nearly all parts of the country, none more so than in London and its suburbs, and this is helping to keep house price growth solid.
Now, with Theresa May calling a snap general election for June in a move that almost no-one saw coming, there may be similar fears that the property market and house prices could suffer. While it is true that the property market experiences pre-election jitters – with buyers, landlord, tenants and sellers likely to hold off from taking decisive steps until the it’s apparent who will be governing the country – the short time period between now and the election on June 8 should limit this more than usual.
We must remember that it’s not been two years since the last general election and so there is no indication that housing policies will be markedly different. As the property industry showed before and after Brexit, it can cope well with outside uncertainty and there is no reason why that can’t be the same for this latest election.
Following a slowdown before the 2015 general election, the property market soon bounced back. And, after a slowdown before the Brexit vote, and a slight dip afterwards, the property market once again recovered admirably. There is little to suggest it will be any different this time out, especially if the fundamentals of the housing market remain the same.
In other words, buyers and sellers shouldn’t panic, neither should tenants or landlords. While some will understandably hold off on any activity until the result of the election has become clear, others will choose to go ahead anyway. Activity tends to ramp up around this time of the year, and that should remain the same despite the election in June.
According to Nationwide’s most recent House Price Index, the annual rate of house price growth slowed in March – down from 4.5% to 3.5%. Even then, that still represents stable and steady growth. House prices fell slightly in March, down 0.3% on February, but this can be partly attributed to seasonal effects.
Although house price growth softened slightly in March, it’s certainly nothing to be alarmed about, with price growth still more than 3% higher than this time last year. Halifax’s latest House Price Index broadly agreed with Nationwide, with annual house price growth falling from 5.1% in February to 3.8% in March. Still, though, that means house prices in the three months to March 2017 were 3.8% higher than the same period in 2016, very far from suggesting a disastrous property crash is on the horizon.
Put simply, despite ongoing political uncertainty – with Brexit and now a snap general election looming – house price growth is remaining resilient and the property market looks as robust and stable as it’s ever been. In other words, we can all take a ‘Don’t panic, Mr Mainwaring’ approach.
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