UK Election and Interest Rate Uncertainty will it affect market

Strutt & Parker says the political uncertainty over the upcoming election is likely to sharply curb market activity next year – although there will still be some price growth.
The agency says prices will rise by an average of five per cent across the UK and around three per cent in prime central London.

That is actually more optimistic than some other agencies which have previewed next year’s market. But even so, Strutts’ forecasts are a stark contrast to 2010 and 2011 when prime London prices surged by over 13 per cent year-on-year.

In addition to election jitters, Strutts says the prospect of interest rate rises and the continuing effects of the Mortgage Market Review are creating what head of research Stephanie McMahon calls ”potential headwinds” to batter the market next year.

If supply improves significantly thanks to the gradually strengthening house building figures, prices will be dampened, she warns.

“The government are continuing to boost house building across the country, and recent output figures from the construction sector reflect this. House prices tend to rise when stock is low and with more houses being built, particularly in the lower end of the market, this could also have an effect on prices over the next few months” explains McMahon.