Despite the fears of many analysts, the upcoming general election will have only a minimal impact on the property market CBRE claims.
A new report from the leading commercial property and real estate advisor shows that economic performance remains the most significant factor driving the market, with strong office take-up coinciding with periods of strong economic growth. In contrast the correlation between property related decisions and the timing of elections is negligible.
“Conventional wisdom suggests that property markets slow as a general election approaches,” says Miles Gibson, Head of UK Research at CBRE. “Elections are uncertain, with the forthcoming election more uncertain than most.
“However, the data shows that the property market is actually very resilient in the run-up to an election, with little observable change to the overall behaviour of the market, except where a detailed policy has already been proposed, such as the mansion tax.”
“There is little, if any, evidence of UK general elections having any overall impact on property investors or occupiers, the pace of planning decisions or house prices.
“This may be because party manifesto policies on property are typically very general and, where they are specific, they take time to be implemented.”
Based on data from the past thirty years, CBRE found little evidence of a corresponding slow-down in the Central London office investment market during election years.
There have been six general elections in this period all of which took place in the second quarter of the year. Second quarter activity is traditionally lower in both election and non-election years.
However the data shows year-on-year increases in investment transactions in five out of six general election quarters in the period, suggesting that second quarter slowdown is due to seasonal factors unrelated to the occurrence of elections.
The London investment market is currently very strong and demand remains robust. Consequently, the report claims, the market will be driven by the availability of stock rather than the outcome of May’s election.
Occupiers are also undeterred by the election factor, the evidence suggests. Fifteen million square feet was leased last year- the highest annual total since 2006. Demand will not diminish due to the impending election, as evidenced by the above-average level of space currently under offer, and 2015 is expected to be another good year for office take-up.
As far as planning decisions are concerned, the report found no evidence of any obvious slowdown prior to the 2010 general election. Even in the case of major applications, there was little change, with around 70 per cent of decisions being made on schedule in the three years prior to the election.
In the residential sector CBRE expects no noticeable negative impact on either the mortgage market or house prices. However, the so-called mansion tax proposed by both Labour and the Liberal Democrats could lead to a slight slowdown in the prime residential market which accounts for just 2 per cent of sales.
