House prices: Could the General Election 2010 spark a property crash?
PROPERTY experts today warned that the General Election could spark another property crash.
With homeowners in a mad rush to sell property before the General Election on May 6, experts are warning that a hung parliament would see sellers "retreat for the hills".
Selling activity was at its highest since May 2007 last month, according to the Royal Institution of Chartered Surveyors (RICS).
RICS reported new house sale instructions outpacing buyer activity for the third month in a row as political uncertainty ahead of the looming General Election prompted sellers to put up “for sale” signs.
VOTE IN OUR POLL: WHICH PARTY WILL YOU VOTE FOR IN THE GENERAL ELECTION?
Seller activity rose to levels not seen since just before the introduction of Home Information Packs (HIPs) in 2007.
Financial experts believe the "very real prospect" of a hung parliament - in which no party wins by an outright majority and parliament is left in a state of flux until a coalition is formed or another election is held - could spark a run on the pound, plunging Britain into further economic turmoil.
It seems savvy homeowners are looking for a quick sale now, rather than ride out another property slump.
With the odds of a hung parliament growing by the day, the market is already bracing itself for the worst.
Matt Hutchinson, of flat and house-share website Spareroom.co.uk, told Express.co.uk: "It would be better for a property market low on confidence if there is a clear winner on May 6.
"The last result anyone wants is a hung parliament and the uncertainty attached to it, but with the odds of this happening growing by the day, the market is already bracing itself for the worst.
"Whether a hung parliament will trigger a property market crash is the million dollar question, but economic uncertainty has been a major contributory factor in the market's turbulent journey over the past 12 months, so it's a fair assumption to make that political parties squabbling amongst each other is unlikely to instill too much confidence amongst buyers and sellers.
"Although the General Election effect is good news in the short term for buyers who are in a position to buy immediately, the very real prospect of a hung parliament is likely to have a detrimental effect on the housing market post May 6, with every likelihood that sellers will retreat for the hills until the political uncertainty is resolved."
He added: "Even if a hung parliament is avoided, confidence in politicians is at an all-time low, and whoever wins will have their work cut out to convince the public that property is the fail-safe investment it once was."
As for his predictions over how an outright winner would affect the property market, Mr Hutchinson added: "The general feeling is that if the Conservatives prevail this will provide a timely confidence boost to the market, while a Labour win will probably result in a flat market for the rest of the year."
Andrew Montlake of independent mortgage broker Coreco told Express.co.uk that if a hung parliament is declared, mortgage rates and interest rates are likely to be hard hit.
He said: "A hung parliament could well lead to a hike in the costs of longer-term fixed rate mortgages, as initial uncertainty may cause the wholesale costs of funding for these products to rise.
"For me the biggest issue that could affect house prices is an earlier or higher than expected increase in interest rates, which would have a more dramatic effect than in more 'normal' conditions, and could see a glut of properties flooding the market and depressing house prices."
But many experts agree that whatever the outcome of the General Election, the property market lies in the hands of the homebuyer - and not with who presides over parliament.
Tim Hammond, chief executive of property search experts The Buying Agents, told us: "Whether the election results in a hung parliament or an outright win for either party, when it comes to the homebuyer it is all about confidence, or lack of it, on when they decide to look to buy their home and what price they are prepared to pay."
But with buyers having little or no way of gauging what real property values are, sellers demanding higher prices and both groups refusing to trust estate agents' valuations as prices fluctuate, the property market is suffering as buyers wait for the post-election correction, say observers.
