How will the general election impact the housing market?

The anticipation, uncertainty, and eventual outcomes of general elections can influence the decisions of buyers and sellers alike. With the general election expected to be called this autumn, many of us may be left wondering how this will affect our property transactions. But what exactly is the impact of general elections on the property market, and how do these dynamics play out?

We commissioned a report from data analysts at Dataloft to dive deeper into the relationship between elections and the property market. Using Land Registry figures to look at price changes before and after the last seven elections dating back to May 1997, we have shed light on the how elections affect market activity. 

The market in the lead-up to elections

Looking back at the last seven general elections provides valuable context for understanding the trends in the property market around elections. From Tony Blair's victory in 1997 to Boris Johnson's ‘Boris bounce’ in 2019, each election has left its mark on housing market activity and prices. Interestingly, the data reveals that in the build-up to elections, there tends to be a slowdown in the number of property transactions. This pre-election uncertainty creates hesitancy among buyers and sellers, leading to a temporary dip in market activity in the three to four months leading up to voting day. This pattern holds true for six out of the last seven elections.

Post-election dynamics

However, once the election results are announced, there is often a burst of activity in the property market. The newfound clarity regarding the political landscape typically injects momentum back into property transactions. Buyers and sellers, now with a clearer understanding of the outcome, resume their activities, driving a surge in market activity.

Notably, Boris Johnson's election win in 2019, this post-election bounce led to a notable increase in house prices, dubbed the ‘Boris bounce.’ However, only in the 2005, 2010 and 2017 elections did the price growth surpass the preceding period. In the remaining four, prices continued to grow in the three months post-election, but at a lower rate, suggesting that elections might not be the primary driver of price trends.

Additionally, the data indicates that this post-election surge is not always consistent across the different segments of the property market.

How does Prime Central London compare to the rest of the country?

The data further highlights regional variances in how general elections impact the property market. In Prime Central London (PCL) price growth tends to slow down following a general election. However, this unique market segment is often influenced by global rather than domestic factors, suggesting that general elections are not the sole force driving price trends in this market.

Crack on in spring

As the data shows, it’s typical for people to hold off on buying or selling in the run up to an election. While there may be a temptation to do so until after the election for the sake of clarity, this strategy could mean missing out on the prime selling season – spring.

Springtime traditionally sees a surge in property sales, with homes appearing more appealing against the backdrop of blooming gardens and warmer weather. Over the last five years (excluding 2020 due to Covid), 27% of sales took place in the spring, the highest of any of the seasons (Dataloft, HMRC).

Over the same period, properties took an average of just 51 days to sell, compared with 61 days in the winter. Waiting for post-election price surges might not be the best strategy. Contrary to expectations, data suggests that price growth in the Prime Central London market was higher after a general election on only a few occasions this century. Therefore, delaying property transactions in the hopes of capitalising on higher prices post-election could prove to be a risky tactic.

Conclusion

While general elections do exert some influence on the property market, the impact is more nuanced than it seems. While elections may introduce short-term fluctuations, the long-term fundamentals of supply and demand continue to be a driving force in the property sector. As buyers and sellers plan to make their next moves in property, understanding the patterns of past elections and leveraging timely opportunities will be helpful for those looking to capitalise on market momentum.