After a shocking night for British politics, with Theresa May failing to achieve the landslide victory expected, the UK is undoubtedly about to enter a period of uncertainty.
Such an extended period of uncertainty is historically unattractive to inward investment, meaning that the UK and London housing markets are likely to be impacted.
The weakened position of the Conservative party, in conjunction with a pro ‘soft-border’ DUP, would suggest that the UK will be on course for a softer Brexit.
According to investment advisory service London Central Portfolio, this outcome may well be attractive both to institutions considering their position in the City of London and international investors looking at the UK, particularly as global events such as the Trump-Russia affair and continuing destabilisation in the Middle East is causing even greater economic and political flux outside the UK.
The diminished threat of Labour implementing aggressive un-costed tax and spend policies will also be welcome both to business and investor sentiment, taking the edge off uncertainty caused by these election results. Significant tax increases targeted at property investors that Labour might also have instituted are now less likely to occur.
Whilst sterling has rallied slightly in the early hours of today, it is now between 2 percent and 3 percent down against the dollar and euro from yesterday (as of 9.00am 09/06/17) from an already weak position. This is likely to continue in the current political situation which may encourage more active investors to take advantage of discounted prices in the property and stock market, LCP continued.
Nevertheless, it is anticipated that transactions will continue to fall in Prime Central London whilst investors assimilate the new situation, particularly at the luxury end and in the new build sector, already battered through the introduction of new residential taxes.
For the domestic housing market, outside Prime Central London, the recent evidence of a downturn by most data analysts, due to concerns over a weakening UK economic position and rising inflation, is unlikely to be reversed in light of the current events.