The UK election result will create more uncertainty for the London property market, affecting values and sales volumes, real estate brokers say. London homebuilders that develop high-end homes dropped after the hung parliament. Crest Nicholson Holdings Plc fell 6.7 percent, the most in 11 months, and was down 5 percent at 580 pence at 1:16 p.m., making it the biggest faller in the FTSE 350 Index. Berkeley Group Holdings Plc, the UK capital’s biggest homebuilder, was down 3.4 percent.
Housing Minister Gavin Barwell lost his seat as Prime Minister Theresa May’s gamble on calling a snap election backfired. The Labour Party won support after it called for more affordable homebuilding by local government after property values and rents soared, and said it would suspend the right of tenants to buy discounted properties from the councils.
The UK’s housing crisis “deserves greater ambition and bold action from the new government,” said Adam Challis, head of residential research at broker Jones Lang LaSalle Inc.
Challis added that “a coalition government provides the economy with less stability. The short-term impacts are uncertain and this could drag on housing market activity if clear political leadership does not emerge quickly.” Giles Hannah, a Middle East-based international real estate adviser, who has brokered high-end property deals in London, believes that cash based international buyers will now dominate the luxury home market as sterling falls. He forecasts house price growth of almost zero in 2017 and 2018 and says values should still rise by 15 percent by 2021.
By contrast, Jo Eccles, managing director at Sourcing Property, says the uncertainty will deter overseas buyers from making a long-term commitment to London property, hurting the prime market. The election result probably rules out additional taxes on property because introducing them would require more cross-party support, Knight Frank LLP Chief Economist James Roberts said by email. The result is unlikely to have a negative impact on overseas investment into the UK, he said. Sales listings of UK homes “are likely to decline as homeowners stay put, adding volatility to a fragile market,” Bloomberg Intelligence analysts Iwona Hovenko and Sue Munden wrote in a note.