The political fun and games continue.
Johnson is out and a host of Conservative politicians are lining up to take over.
The first question on voters’ lips is “Who will win the 150th Open at St Andrews?”.
Slightly further down the pecking order are questions such as “Who are half of these Conservatives?” and “Which one will do the least damage?”. It’s always inspiring to have such a high-quality choice of candidates…
Of course, this has led to the pundits going into overdrive and people panicking about the possibility of a Labour government. The theory being that a Labour government is bad and a Conservative one would be good (or at least less bad…).
But, as I point out in the talks I give for private banks and solicitors, the property cycle repeats like clockwork – irrespective of the party in power (or indeed the king or queen). So, the property market crashed horribly in 1990 after several years of Conservative rule (Thatcher) and that crash was then exacerbated by John Major’s Conservative government.
Meanwhile, prices boomed during Tony Blair’s Labour government and then also crashed. If you want to compare notes, the crash in 1990 under the Conservatives was far worse in property terms.
Now, you are probably thinking that Blair’s Labour government was far more centrist than Corbyn’s or Michael Foot’s/Neil Kinnoch’s Labour Party and you would be right, which is why none of them won an election…
Yes, there were the shambolic Labour governments of the 70’s when the UK was the sick man of Europe, but that also included 4 years of Conservative rule.
In short, the property cycle is agnostic. There are far more powerful forces at play that will cause prices to boom. For example, were you aware that the Bank of England’s Financial Policy Committee has withdrawn the “mortgage market affordability test”?
“Following its latest review of the mortgage market, the Financial Policy Committee has confirmed that it will withdraw its affordability test Recommendation”.
This will come into effect from 1 August 2022. While this in itself doesn’t mean much because there are other restrictions on lending still in place, it is just another example of how regulations are being relaxed to allow more lending.
THIS HAPPENS IN THE SECOND HALF OF EVERY PROPERTY CYCLE AND IT HAS ALWAYS CAUSED PRICES TO BOOM.
It might be different this time, but as investing legend Sir John Templeton once said “The four most expensive words in investing are “It’s different this time”.