It may have taken some by surprise but, following, the calling of the general election towards the end of last month, most of us are resigned to weeks of intense political coverage, and, love it or loathe it, to the fact that we’re going to the polls on July 4.
If you’d been contemplating a house move when Rishi Sunak announced his decision from a rain-soaked Downing Street, you could well be wondering what impact, if any, the general election might have on property prices and the housing market more widely.
Clearly, if you’re relocating for work, or need to up sticks for pressing personal reasons, you might have no choice but to move. However, if a move is more of a “nice to have”, whether you’re buying or selling or both, you may be considering putting your plans on hold until later in the year. But do you need to?
One of the UK’s biggest lenders, Nationwide, reported at the end of last month that the UK’s property prices had bounced back modestly after a couple of months during which the picture was more mixed, with slight increases in some mortgage deals.
The organisation added that the market was displaying ‘resilience’. At the same time, data from tax authority HMRC showed that, in April, house sales rose for the fourth month in a row, with a 5% lift taking numbers over the 90,000 mark.
The building society has been studying data on houses prices during times of elections (and the EU referendum) to see whether there was any impact on prices and to look for any potential trends. But its chief economist, Robert Gardner said these events did not cause ‘volatility’ or have any significant effect on house price trends.
Gardner added that, typically: “Prevailing trends have been maintained just before, during and after UK general elections”. Wider economic trends seem to have greater impact than anything immediately related to a national vote.
The building society also assessed whether general elections affected mortgage approvals, but again found minimal impact.
Gardner continued: “Housing market trends have not traditionally been impacted around the time of general elections. For most homebuyers … [these events] … are not foremost in their minds while buying or selling property”.
Meanwhile, Compare My Move, which puts movers in touch with the professionals they need, has found that house prices generally increase in the year straight after a national poll, to the tune of an average 4.6%.
Interestingly, its research also indicates that what can make a difference is whether a poll resulted in a hung parliament or a party with an overall majority. In the latter case, according to the company, house prices lift by an average of almost 7% more when compared to a hung parliament situation.
That’s perhaps understandable when you consider that a lack of stability can make markets jittery. The firm added:
“Even that doesn’t necessarily mean prices will drop as they did after the vote in 2010. They could just increase more slowly than if we had a majority. If anything, there’s often a post-election bounce, meaning we expect the market to strengthen later in the year.”
Again, that prediction could be because new political certainty can boost consumer confidence.
What’s more, if the current opinion polls are to be believed, the nation isn’t overwhelmingly likely to be heading for a hung parliament this time around anyway.
But an election alone doesn’t trigger a rebound in the housing market. The economic and political circumstances surrounding it are more important. In 2024, there is a certain amount of pent-up demand to take into account, after many have felt obliged to stay put in the face of high inflation, rising living costs and 14 interest-rate hikes on the trot.
It’s also worth pointing out that, in the 27 years of its independence, the Bank of England has never slashed interest rates just before a general election, and there have been six national ballots since May 1997.
Even the stamp duty holiday of the pandemic period may not have been enough to tempt people to move at such a time of rising costs. And that was no doubt particularly the case for first-time buyers, for whom soaring rents made it more difficult to save enough for a deposit. Equally, stamp duty may have put off some who might otherwise have downsized from their family home, so there’s been that pent-up demand across all stages of the property ladder.
According to the Telegraph, the currently more positive economic momentum should lead to a busy autumn for estate agents and the return to a traditional seasonal housing market for the first time since pre-Covid days, election or not.
Finally, a survey from one leading national estate agents earlier this year found that nearly 80% of its high-end clients said the election had “no impact at all” on any decision to move house over the coming year.
Oakfield says
At Oakfield, we know it can be tempting to think that elections must have a big impact on the market. But the reality may not be quite so clear-cut. Other factors, including economic climate and affordability, can be just as important, if not more so. And we have a hunch that this election could have less of an impact than previous votes. Indeed, we’re expecting brisk business to continue throughout the second half of this year and beyond, and are looking forward to helping more people across our parts of East Sussex to buy and sell their homes.
With offices across our patch, we first started working in our neck of the woods in the mid-1990s, since which time we’ve expanded significantly. Whether you are buying or selling, we’re ideally placed to help. Get in touch today to learn more about how our services could help you, before and after the election. Find our contact info here.