Lettings agency Knight Frank says it doubts the current high levels of capital appreciation will be derailed this year by uncertainty over the identity of the next Prime Minister.
The agency says the mid-term election of a new prime minister is hardly a new phenomenon, and the housing market is likely to take a leadership vote in its stride.
“We expected a slowdown in the second half of the year as higher mortgage rates bite and supply continues to build, but that could be compounded if a leadership vote leads to a general election. However, that prospect feels unlikely in the short term” says a reassuring statement from the agency.
“Waiting until after inflation has peaked at the end of this year would be a lower risk strategy for any incoming prime minister. By next spring, even with inflation falling, the calculation may be that waiting 12 months until the next scheduled election in May 2024 is the best option.
Whenever the next election takes place, it will have the time-honoured impact of slowing the housing market in the run up. Before then, it doesn’t feel like the country is about to change tack politically in a meaningful way” the agency concludes.
As evidence, Knight Frank notes that the Halifax reported 13 per cent annual house price growth in the UK, the strongest figure in 18 years, despite months of Tory in-fighting over Boris Johnson’s leadership.
However, the agency concedes that stock levels are rising, which will help reduce house price growth to single digits by the end of 2022.
The firm asks: “Will the price slowdown happen suddenly? In a market like residential property, which moves at a relatively slow pace, it’s unlikely. For now, the ratio between the number of new prospective buyers (demand) and sales instructions (supply) is clearly moderating, Knight Frank data for Q2 shows. The ratio was 7.6 in the second quarter, which compares to 11.9 in Q1.”
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