Residential Property Market May Slow Ahead of Election

Britain’s upcoming parliamentary election this May will likely slow down any recovery in the country’s residential property sector, with more investors set to wait until after a new government is formed before purchasing real estate, reports the RLA

London Central Portfolio published research suggesting that it is common for the uncertainty prior to a general election to make investors more cautious of expanding their portfolios. While this will likely result in a temporary slow down in transactions, London Cental Portfolio pointed to statistics collected by the Land Registry to argue that the weeks immediately after an election usually result in an upswing in activity for the property sector.

The recent uncertainty injected into an otherwise predictable campaign due to polls showing the Tories leading Labour by a smaller margin than previously thought may also convince more investors to wait until after the vote. The potential for a hung parliament might also make investors jittery and fearful of political instability. But observers note that braver investors may have a golden opportunity to snap up residential properties for bargain prices as the market slows before the election, only to sell them at a profit once the sector picks up soon after the government has formed.

The pattern already witnessed before previous elections appears to be repeating itself. Statistics published by Halifax and HM Revenue suggest that residential property values dropped by 1.5 and the number of transactions also started to decline in February. But if the 2005 election was any indication, prices will rise noticeably after the vote. In the last general election, values increased by 5.2 percent in the three months following polling day.