Election and the Market!

Paul Jarman, Head of Savills Home Counties

The value of prime residential property across the UK grew by 2 per cent over the past quarter, building on a 4.6 per cent uplift in the second half of 2009, according to Savills Research.
Average, price growth for prime regional property remained relatively modest when compared to prime Central London (+3 per cent in the first three months of 2010 and 4.6% in the final quarter of 2009) but the sector is now outperforming the mainstream markets. “There are no surprises here,” says Lucian Cook, director of residential research at Savills. “The prime regions are traditionally less volatile than prime Central London and lag in recovery terms, but the forecast ripple effect of London wealth is now giving prime commuter spots a real boost.”
As to whether the election will affect the property market, Cook further comments: “If we look at annual levels of property transactions over the past 50 years it is difficult to argue that an election alone has an impact on activity in the property markets over the course of a year.
Those elections years which did correspond with a fall in or low transaction levels were in 1974, when there were two elections as a result of a labour minority government and when, in light of significant economic uncertainty, house prices fell by 14% in real terms; in 1992 at the tail end of a period of three years of house price falls when transaction levels had also been on a 4 year downward trend and in 2005 when house prices were flat in real terms.
Over the course of a year whether the election has an impact on transaction levels is essentially dependant on the underlying economic circumstances. Transaction levels have been roughly half of the 30 year average in the last two years and because of mortgage constraints and a slow recovery from the recession, continued political uncertainty will do little to encourage much of a recovery that seems increasingly reliant on the autumn market.
Paul Jarman, head of Savills Home Counties added: “Despite the fact that election campaigns have in the past dampened buyers enthusiasm, so far this year, we have yet to see any perceptible decline in market activity in the Home Counties region, on the contrary, buyers and sellers remain very motivated.”
Paul Jarman, Head of Savills Home Counties

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