What impact will the general election have on UK property prices?

The United Kingdom’s property market is a complex and dynamic entity, influenced by various factors such as economic conditions, interest rates, and government policies. One significant factor that periodically impacts property prices is the outcome of general elections. This blog post delves into how general elections in the UK have historically influenced property prices and what the specific effects we can expect from the upcoming general election on Thursday July 4th 2024.

Historical context: elections and property prices

Historically general elections in the UK have created periods of uncertainty in the property market. Buyers and sellers often adopt a wait-and-see approach during election periods, leading to a temporary slowdown in market activity. This uncertainty stems from the potential changes in government policies that could affect housing, taxation, and the broader economic environment.

For instance, the 2010 general election, which resulted in a coalition government between the Conservatives and the Liberal Democrats, saw a notable impact on the property market. The uncertainty before the election led to a slowdown in transactions, but once the coalition’s housing policies became clearer, the market adjusted accordingly. Similarly, the 2017 general election, which resulted in a hung parliament, caused a brief dip in property transactions due to the uncertainty it generated.

The 2019 general election: A case study

The last general election held in December 2019 provides a clear example of how electoral outcomes can influence property prices. This election was particularly significant due to the backdrop of Brexit and the political turmoil that preceded it. The Conservative Party, led by Boris Johnson, secured a decisive victory, which brought a level of certainty regarding Brexit and the direction of government policies.

Pre-election period: market uncertainty

In the months leading up to the 2019 general election, the UK property market experienced a slowdown. Potential buyers and sellers were cautious, with many postponing their decisions until after the election. According to the Royal Institution of Chartered Surveyors (RICS), there was a noticeable decline in new buyer enquiries and new property listings during this period, this is something we also saw at Curetons. This was attributed to the uncertainty surrounding the election outcome and its potential impact on the housing market and the economy.

Post-election impact: A surge in confidence

The Conservative Party’s victory in December 2019 provided a clearer political direction, especially concerning Brexit. This clarity had an immediate positive impact on the property market. According to data from Rightmove, there was a significant increase in both property listings and buyer enquiries immediately following the election. The so-called “Boris Bounce” saw a surge in market activity as confidence returned.

  1. Increased transactions: The post-election period saw a marked increase in property transactions. According to HM Land Registry data, there was a noticeable uptick in the number of properties sold in the first quarter of 2020 compared to the same period in the previous year. This was a direct result of the renewed confidence and the release of pent-up demand from the pre-election uncertainty.
  2. Price growth: Property prices also experienced an uplift following the 2019 general election. Nationwide Building Society reported that annual house price growth rose from 1.4% in December 2019 to 2.3% in February 2020. This growth was largely driven by increased demand and a relatively constrained supply of properties.
  3. Regional variations: While the overall trend was positive, there were regional variations in the impact of the election on property prices. London and the South East, which had experienced slower growth in the years leading up to the election, saw a more pronounced bounce in activity and price growth. Conversely, regions that had already been experiencing robust growth, such as the Midlands and the North West, saw more modest increases.

Long-term implications of the election

The long-term impact of the 2019 general election on property prices is intertwined with subsequent events, most notably the COVID-19 pandemic. However, several policy measures introduced by the Conservative government in the wake of their election victory have had lasting effects on the property market.

Housing policies

The Conservative government’s housing policies post-2019 election have aimed at increasing housing supply and supporting home ownership. Key measures include:

  1. First homes scheme: A policy to provide discounted homes to first-time buyers, which aims to make home ownership more accessible to young people and key workers.
  2. Planning and leasehold reforms: Efforts to streamline the planning process and encourage the construction of new homes. While these reforms have faced opposition and have been subject to revisions, they reflect a broader commitment to boosting housing supply.
  3. Stamp duty holiday: Introduced as part of the economic response to the COVID-19 pandemic, the stamp duty holiday significantly boosted property transactions and prices in 2020 and early 2021.

Economic factors

The broader economic environment post-election has also influenced property prices. The Conservative government’s focus on economic stability and growth, coupled with low interest rates, has supported the property market. However, economic challenges such as the COVID-19 pandemic and subsequent lockdowns have introduced new variables into the market dynamics.

Lessons for future elections

The impact of the 2019 general election on UK property prices highlights several key lessons for understanding the relationship between political events and the housing market:

  1. Uncertainty dampens activity: As seen in the pre-election period, political uncertainty can lead to a slowdown in market activity. Buyers and sellers prefer to wait until there is clarity before making significant financial decisions.
  2. Political stability boosts confidence: A decisive election result that provides clear policy direction can lead to a surge in market activity. The “Boris Bounce” following the 2019 election is a prime example of how political stability can restore confidence in the property market.
  3. Policy continuity matters: The long-term impact of an election on property prices is influenced by the government’s housing policies. Policies aimed at increasing housing supply and supporting home ownership can have lasting effects on market dynamics.
  4. Regional variations: The impact of elections on property prices is not uniform across regions. Economic conditions, local housing markets, and regional policy differences can lead to varied outcomes.

Conclusion

General elections in the UK are significant events that can have profound effects on the property market. The last general election demonstrated how political clarity and stability can boost market confidence and activity. While the immediate post-election period saw increased transactions and price growth, the long-term impact of the election is shaped by subsequent government policies and broader economic factors. As the UK approaches this new general election on July 4th and with Labour ahead in the current polls understanding these dynamics will be crucial for anticipating changes in the property market. Whether you are a buyer, renter or investor with advice from a specialist London property buying agent such as Curetons we can help you stay informed about the political landscape and its potential impact on the London property market.

Related articles

This website uses cookies in order to work properly. If you either click “OK” or navigate to any other part of this site, we will start to save cookies on your device in accordance with our Cookie Policy.

FREE NO OBLIGATION CONSULTATION

Arrange a meeting with one of our property consultants to learn more about your requirements.