The UK General Election results are in and we have a ‘hung parliament’, with no one party being able to form a majority government for the second time in seven years. So, is the General Election result likely to be good or bad for the Scottish property market?
Ultimately, whether it’s a majority coalition, a single party majority or a minority government, the government will enact policy and that policy will either be good, bad or neutral when it comes to its effect on the UK and Scottish economy. Depending on one’s political leanings, we will all have views on what policies will be best for the economy. However, until they actually happen, nobody can know for sure and that would have been the case regardless of the election result.
Roughly half of the country will be disappointed by the result in a General Election and the other half relatively happy. In this case, you could argue that nobody will be supremely happy. This might lead to a sense of gloom caused by nobody having any certainty that the views that they hold when it comes to economic direction are going to be enacted. If that’s the case, the only negative effect on the housing market in Scotland may be that nobody currently has any faith that the policy or policies that they believe would be great for the economy or, as a result, the housing market will actually be enacted.
Without wanting to stir-up the sort of polemic debate that tends to happen when the words, ‘Scottish Independence’, are mentioned, let us first say that we are entirely, completely, 100% neutral when it comes to this issue! That said, for some people, the prospect of a second Independence Referendum in Scotland might have caused some doubts in their mind about the effect of a ‘yes’ vote on their property value. The flip side is, of course, also true: some people will believe that it would be a positive thing for the value of their property. For others, they won’t really have an opinion one way or the other.
So, do the losses experienced by the SNP in the UK General Election give us an indication that there will not be a second Independence Referendum? I’m not really sure that they do. For now, however, the SNP remains the majority party in the Scottish Parliament and forms the Scottish Government. It has stated its commitment to seeking a second Referendum in the next couple of years. Time will tell whether the current election results indicate, as far as they are concerned, a reduced likelihood of them achieving the result that they want in a second Referendum.
Whether or not you think that Scottish independence is a good thing, there has been a period of uncertainty over this issue for a few years now and nothing really has changed about that.
The bigger question here is whether any of this stuff actually affects the behaviour of the majority of property buyers and sellers in Scotland.
I would argue that very few people woke up this morning thinking, “I’d love to own my own home, however a hung parliament has entirely changed my mind about that.” Buying a home is an emotional decision as well as a practical one and there will always be people who dream of owning their own home. On a practical level, compared with more volatile investments in other areas, the majority of people who don’t own a hedge fund perceive that a residential property remains a ‘safe’ investment and one that has the additional benefit that you can live in it.
As for those thinking of buying an investment property, the argument is perhaps stronger that it may affect their decision-making. However, we have recently experienced an Independence Referendum in Scotland, a ‘Brexit vote’, the election of Donald Trump as President of the USA, the declaration that the SNP government in Scotland wishes to hold a second Independence Referendum in Scotland and we now have a hung parliament. This period of uncertainty has existed before now and will continue to exist, regardless of the UK General Election result.
Irrespective of this, people have continued to buy and sell residential properties in Scotland so I don’t anticipate that this election result will change that very much.
In short, whilst many senior politicians will certainly be dusting-off their CVs this morning, I would expect that things will continue largely ‘as is’ in the Scottish property market in spite of today’s General Election result.