There has been a lot of talk in the media about the effect of the election result on the property market. The expected increase in market activity and rise in prices is being called the ‘Boris Bounce’. As you might expect, the new PM is taking full credit for it.
The signs that the period of uncertainty is over are evident with banks approving the highest number of mortgages in more than four years in December and approvals for house purchases up 2.8% on the previous month. This is the highest monthly rise since August 2015.
According to Rightmove, house prices rose by 2.8% in the month following the election, the largest monthly rise for the period since the survey began in 2002.
Not to be outdone, Nationwide has said that house prices rose 1.9% in the year to January.
Naturally, not everyone is bullish on the prospects of the market, with some predicting that already-high house prices and low interest rates will curtail any substantial surge in values.
However, the general consensus is that the good times are set to return. This is partially due to the sense of optimism created by Boris and his new government. Thank you, Boris.
Of course, the honeymoon period most governments enjoy will eventually end and market sentiment may change.
The good news is that the fundamentals of the ongoing housing shortage, strong rental demand, and lower interest rates should support the market over the medium term.
Whilst the extent of the upside is uncertain, the downside risk appears minimal.