How might the election impact the property market?
Our agents weigh in
In our lively property market, the effects of a general election can be quite varied. Elections often stir up a mix of political, economic, and social factors that influence house prices in different ways. To get a clearer picture, let’s dive into what our expert estate agents have to say…
Chris Cooper, associate director of sales at Benham & Reeves, suggests that we may see a “limited summer slowdown” because of major sporting events like the Euros, Wimbledon, and the Olympics. These events can temporarily divert the attention of both sellers and buyers. However, Chris points out that “London’s enduring advantages – connectivity, education, security and stability – have kept values high, especially in outer-Prime areas like Hampstead, and we are seeing more homebuyers reconciled to higher borrowing costs and moving ahead with transactions. And although interest rates remain a challenge, buy-to-let investors are more determined, buoyed by the strong employment market, improving wage growth and an extremely strong rental market.”
Looking at past trends, Chris adds: “The general election is not proving a deterrent: it has long been signposted, so comes as little surprise.” He says that in the past 40 years, UK general elections have typically been followed by a five per cent or more increase in house prices in the subsequent 12 months, with only one exception. This shows a resilient market that often bounces back positively after elections, whichever way the results fall.
Matt Thompson, head of sales at Chestertons, shares more insights about the current market. He notes that even though the announcement of the general election on 4 July surprised many, it was generally seen as good news and caused little disruption. “We expect the increased certainty of the political landscape to support confidence in the market and encourage more house hunters to make decisions,” he says. “Another driving force that enticed buyers to act sooner rather than later, has been the appeal of the spring market, which is known as the busiest time of year and has seen an increase in the number of properties being put up for sale. The majority of house hunters have been eager to take advantage of the larger pool of properties to choose from.”
Lucian Cook, head of residential research at Savills, explains how elections can impact the housing market on a broader scale. “For a general election to have an impact on the housing market the outcome would need to raise the possibility of a material change in the macro-economic backdrop, direct housing policy, or property taxation,” he says. “Often that isn’t the case, so there isn’t consistent evidence of a tangible election impact on the market. An incumbent government will typically want to have seen major housing policies bed in during the run up to an election, to give itself the opportunity to campaign on the back of its track record.”
“By contrast, the market can be spooked if there are concerns over the potential handling of the economy, or the risk of a higher regulatory or tax environment,” says Lucian. “Ill-fated proposals for a mansion tax in the first half of the 2010s are probably the most recent case in point, even though ultimately it was the increase in stamp duty for the most expensive homes which initiated a prolonged period of sobriety in the Prime markets over the next five years. That means there has to be a strong political motive for sweeping policy changes to be included in a party manifesto.”
So, while general elections can create some uncertainty, London’s property market has shown impressive resilience. And the future looks cautiously optimistic, with historical patterns and current conditions indicating that the Capital’s housing market is likely to keep thriving, regardless of political ups and downs.
