election

Here’s What the UK’s Election Outcome Could Mean for Property Prices

Overview

Real estate is one of the most important industries in the UK. With the upcoming election, every economic industry is on edge with what will happen depending on who is in office. Typically, election cycles bring in new people to govern over the UK and they usually want to change the way things have been going.

For real estate, mortgage rates could see a radical change with the upcoming election. Property prices are not tied to mortgage rates, but they can affect the housing market which will indirectly hit property prices. It is important for people in the UK to understand how property prices could be affected by the upcoming election.

Property Prices

In real estate, price is everything. One of the best indicators of how strong or weak the real estate market is revolves around how the real estate prices are. If prices are rising, that is a general indicator that the real estate market is going well. In an economy where prices are falling, demand is lower and supply is higher. This generally means that the economy is weakening. Due to the fact that real estate is such a forward indicator for many other economic industries, there are a lot of people that follow how the real estate market is doing. With the upcoming UK election, it is important to know how mortgage rates will affect property prices.

Mortgage Rates

Mortgage rates are one of the most important factors in the real estate market. Mortgage rates determine exactly what interest rate people will pay on their home loan. There are generally three parts to a monthly mortgage payment which include principal, interest, and insurance. Whenever interest rates go up, the monthly payments for new mortgages will be higher than before. This can suppress demand in the housing market and cause prices to fall.

However, if the economy is doing really well, it may be able to with stand in changes in interest rates over the long term. For new politicians that come in to office after the elections, all of these factors will have to be weighed heavily before making any decisions.

Final Thoughts

At the end of the day, mortgage rates are not the only indicator of future property prices but they are one of the best indicators that we have. There are going to be new politicians elected in the upcoming election cycle that will want to change mortgage rates. It will be interesting to see how much these change affect the real estate market and overall economy.

Photo Credit: United Nations Photo

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