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Boris bounce: understanding the property market's reaction to the election result

The 'Boris bounce' is the term which has been coined in some quarters to reflect the positive impact the general election result has had on the UK economy.

Let’s recap. Last month, prime minister Boris Johnson succeeded where his predecessor Theresa May failed, ie his calling of a snap election resulted in the Conservative party securing an overwhelming majority in the House of Commons.

Whatever one’s political leanings, the outcome was clear-cut, which was welcomed by many industries and financial markets. Indeed, the property market has already benefited from the so-called Boris bounce.

According to data from Rightmove, in the immediate aftermath of the election (between 13th December and 15th January) UK house prices rose at the fastest rate on record for that time of year. The average list price of a property jumped by 2.3%, and the number of properties moving to the sale agreed stage also increased notably.

No more elections, please

Truth be told, there were fears in some quarters over what would happen to the economy if Jeremy Corbyn became PM. This was certainly true among many investors, higher earners and business owners.

However, the Boris bounce should not be seen simply as a reflection of people’s preference for Tory policies over Labour’s. Rather, it has been a positive response to the prospect of stability.

The 2010s started with the UK trying to claw itself out of a recession triggered by the 2008 global financial crisis. Over the next 10 years the country witnessed four general elections, three new prime ministers (despite the fact the same party won the most seats in every election!) and the EU referendum. It was a turbulent time. Yet the property market responded well.

For Market Financial Solutions (MFS), this was also a period of prolonged success and growth. In fact, 2019 was actually MFS’ most successful year on record. Our loan book grew, and our bridging services expanded into new regions across the UK, from London and the South East to the Midlands and the North.

I expect this market growth to accelerate in the year ahead, not just for MFS, but for the entire property sector.

Indeed, at the start of 2020 we face the very real prospect of five years with no more elections and, hopefully, much less political upheaval. We might just have a prolonged period of relative calm in which the new government can make strides forward in addressing domestic issues and fuelling growth across the economy.

This explains the Boris bounce. And this optimism and sense of stability is what boosts activity in the property market. We have seen that in the five or six weeks since the election.

What to expect in 2020

Looking to the year ahead, two big events lie on the horizon. First, the Brexit deadline on 31st January — will this deadline finally stick, officially commencing the UK’s separation from the EU? Second, the budget on 11th March — what new policies, reforms and spending commitments will the chancellor announce?

All areas of the property market — from developers, lenders and investors to buyers, sellers and renters — have been crying out for more certainty over recent years. They want to know the lay of the land, what changes might be afoot and what’s on the government’s agenda.

The Brexit deadline and budget will provide answers. And they will shape the first half of 2020. Importantly, both present an exciting opportunity for the government to further boost the confidence of consumers, investors and businesses, feeding their ambition to make new plans or push ahead with existing ones.

Responding to increased demand

For both bridging lenders and brokers, the challenge now is how to respond to the potential upturn in activity among property buyers.

At MFS, we have already prepared for this trend in several ways. For one, we have secured numerous funding lines to ensure we have immediate access to capital that can be loaned out.

Moreover, we have grown our team of BDMs and underwriters over recent months so we can expand our reach and handle all enquiries from clients with the utmost speed and professionalism. And we even introduced new, lower rates at the end of 2019, ensuring we are on hand to provide support to property buyers in 2020.

Like many business leaders, I am naturally bullish about the prospects of growth. But, thanks to the election result, at the start of 2020 this feeling is stronger than usual. I look forward to seeing what challenges and opportunities the coming year will present.

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