Political uncertainty from hung parliament means less stability for UK housing market
The UK housing market slowdown, caused by economic and political uncertainty, is set to continue with the general election resulting in a hung parliament.
It is the worst possible scenario for the housing and construction industries at a time when stability is needed with Housing Minister Gavin Barwell losing his seat.
There will now be a pause while furious negotiations go on in the background with both main party leaders, Theresa May and Jeremy Corbyn saying they can form a parliament.
The only certainty is that there will be a new housing minister with Barwell going and this means the sixth minister in a row in as many years.
The property industry is urging whoever forms the next Parliament to make housing a priority. ‘Any newly formed Government will need to work closely with organisations within the property industry and other sectors to deliver a successful housing strategy for the years to come,’ said Michelle Niziol, managing director of IMS Property Group.
She added that more affordable housing to buy and rent, a reformed stamp duty system so that sellers take on the cost rather than home buyers, and measures to speed up house building and delivery of infrastructure, should be high on the housing agenda of any Government.
Russell Quirk, chief executive of online estate agents eMoov, believes that for the property market any post-election return to normality may be rather further away than expected. ‘Political instability breeds procrastination on the part of home buyers and sellers and for over a year now we have seen the effects of that on volumes, if not so much prices, as a consequence of the European Union vote and then the snap general election,’ he said.
He pointed out that even if May can form a minority Government propped up by the DUP in Northern Ireland there is a change that she will quit or be pushed. He is not the only commentator to point out that this could result in another general election later in the year and even another EU referendum.
As the political machinations get underway he is also among a number of experts who fear that housing will be put on the back burner as politicians fight for their careers and Brexit looks as if it will create even more uncertainty with EU negotiators now likely to see May, if she continues, as a weak link.
‘I suspect that the housing brief will take a back seat now, despite politicians’ promises in recent weeks, given the combined weight of negotiating Brexit, stabilising our economy, button holing political support on every vote and, inevitably, campaigning again for the next poll,’ Quirk concluded.
Philip Woolner, joint managing partner at Cheffins, pointed out that the fact that the UK is about to enter a situation with a hung parliament is bound to have ramifications for the property market.
A coalition will provide less stability for the economy and this has ramifications for real estate, according to Adam Challis, head of residential research at JLL. ‘The short term impacts are uncertain and this could drag on housing market activity if clear political leadership does not emerge quickly. It is likely that we will see some ministerial shake-ups in the coming days and weeks. It will be crucial that the new champions of housing market policy in Government can reaffirm commitments to the current policy direction rather than to create further disruption or uncertainty,’ he explained.
‘Importantly for housing supply, the policy direction as set out in the White Paper on building more homes across the range of tenures, will be upheld. Supporting new methods of delivery such as Build to Rent and off-site construction are also emerging and exciting sectors that will expand the pace of housing delivery,’ he pointed out.
‘JLL believes the housing crisis deserves greater ambition and bold action from the new Government. This requires cross party support to de-politicise solutions and to provide longer term backing for new solutions. We call on Government not to lose sight of the key domestic policy challenges. It is vital that the UK government can forge a deeper commitment to housing supply solutions, recognising the common purpose of a wide range of stakeholders in the private sector,’ he added.