With the run-up to an election creating an uncertain property market, buyers can discover a short window of opportunity to purchase homes and get a competitive price
With every news programme containing at least one item on the competing parties’ election promises at the moment, there can be no missing the fact that the General Election is almost upon us. In less than a month we’ll know which party has come out on top, but in the meantime the climate of uncertainty continues, creating a cautious property market. But rather than sitting back and waiting to see what happens, the run-up to an election can actually be the perfect time to buy.
‘There is often a small window of opportunity before an election for dedicated buyers,’ explains Oliver Lurot of Savills Notting Hill branch. ‘Some will postpone their purchase; vendors whose properties have been on the market for some time are aware of this, and may be worried about how the market will sit after the election. This may encourage flexibility, and could be the ideal time for focused buyers and sellers to come to an agreement.’
‘Now could be an opportune time to buy for those taking a long-term view,’ agrees Richard Barber of W.A.Ellis. ‘With many would-be buyers adopting a ‘wait and see’ approach, there is currently less competition in the market, whilst there is still a good choice of properties available. With investors remaining cautious in the run-up to the election, it could be a good chance for buyers to negotiate a better deal as vendors are keen to sell before any changes are implemented.’
Furthermore, Chloe Leefe of Mountgrange Heritage points out that there is also ‘less chance of gazumping as there are fewer buyers competing for properties. Good mortgage rates seem to be cropping up everywhere at the moment, perhaps in anticipation of the market going quiet for a few months. So if you’re serious about buying, now is a great time to snap up the property you want with a great mortgage rate. Those who swim against the tide often end up in a superior position!’
Alex Thompson of Winkworth’s Notting Hill office looks back at previous elections to find a pattern: ‘While sales levels slow prior to an election, they also rally quickly once the political environment becomes settled again. Since 1997, in prime central London, the number of transactions within the three months after polling day were between 10.5% and 20.7% higher than in the three months leading up to the election.
‘While there is some market seasonality affecting these increases, when compared with the same period in years when a general election didn’t take place, a stronger growth in transactions in election years is clearly evident. The number of properties sold in the three months following a general election have been between 4 and 12.2 percentage points higher than increases experienced in non-election years.’
Of course, it’s not just the election that is having a dampening effect on prices, the euro’s fall against sterling and the decline in oil prices have also meant that there has been a switch from a sellers’ to a buyers’ market in London.
10.5% -20.7% : the amount transactions rose by in the three months following an election compared to the three months before
‘Anyone can buy well in a rising market, safe in the knowledge that the capital values will increase in line with general market uplift,’ comments Sophie Roberts of Banda Property. ‘In a static market, however, the househunter needs to think critically about where they can add value. I would advise anyone thinking about buying a property not to be deterred. In fact, now could be the ideal time to make the move. The market is not as competitive, and vendors are more willing to sell their property under asking price, a concept rarely seen last year. It is worth being ambitious and suggesting lower offers as the market is currently open and flexible.’
Camilla Dell of Black Brick adds that vendors are also nervous about the prospect of further tax changes affecting high-end property after the election. ‘For investors, at 2% to 4%, dependent on location, overall yields in London property remain low by historic standards,’ she says, ‘but the recent softening in PCL property prices (Knight Frank’s PCL Index fell for a third consecutive month in January, albeit only marginally, and, at 4.6%, the annual pace of growth at the end of January was the lowest for five years), it at least provides a small fillip to potential investors in rental yield terms. Once the election is over, and if the outcome is a clear result, any window of opportunity would close quite quickly as confidence returns.’
Despite the prime central London market levelling out of late, Will Clark of Sellmyhome.co.uk believes there are always motivated sellers, ‘thanks to the four ‘Ds’ – death, divorce, debt and downsizing. At the same time, political and economic uncertainty in Europe and elsewhere is increasing, which usually brings buyers to the UK – and they won’t be deterred by the UK elections. It would be a shame to miss a dream home by being overcautious.’
reasons to buy in the run-up to the election
- Less competition as many buyers adopt a wait-and-see attitude
- In an uncertain market, sellers are open to negotiation, including developers
- With reduced competition, there’s also less chance of being gazumped
- For investors, softening prices increase rental yields
- Prices tend to increase quite quickly after an election