What does a general election mean for your sale? We explore the political impact on the UK housing market
The announcement of an upcoming UK general election has caught many by surprise.
On 4th July 2024, the British public will take to the polling stations to vote for their political party of choice. For some industries, general elections can bring a sense of uncertainty. Will the housing market be impacted by the news?
As Zoopla reports, the election announcement is likely to stall the pace at which new sales are being agreed to in the coming weeks.
Most buyers who are close to completing on a house will ideally want to push through and agree a sale now. Those who are earlier in the process may look to delay decisions until the autumn after the election is over.
Is this simply a short-term concern or are the effects wider reaching? Read on to find out more.
Will house prices be affected?
Moneyweek points out that, as there is such little time between Rishi Sunak’s announcement (22nd May) and the general election (4th July), it is difficult to say with any certainty what impact it will have on house prices, although we will hopefully have a slightly clearer picture closer to the election.
Nationwide tracks house prices at the mortgage approval stage and found that broad price growth trends seen in the weeks leading up to an election to tend to continue in a similar vein in the months after. The notable exception was in 2019, when prices dropped significantly due to the COVID-19 pandemic.
Nationwide’s Chief Economist, Robert Gardner, states: “It appears that housing market trends have not traditionally been impacted around the time of general elections. Rightly or wrongly, for most homebuyers, elections are not foremost in their minds while buying or selling property.”
What happened around past general elections?
Rightmove determined that, after a period of relative stability in each of their build-ups, 2015 and 2019 both saw a considerable bounce in housing activity post-elections, with demand rising by 18% and 20% respectively.
Rightmove’s housing market expert, Tim Bannister, said: “Previous elections would indicate we may be set for a particularly strong summer once the election is over, especially if interest rates start to fall. However, every election is different, and it would depend on whether any significant housing policies are also introduced, so we’ll need to wait and see what happens to have a better view of activity for the rest of the year.”
Should you continue with your house hunt?
Zoopla says you should. They do not see the election having as big an impact on the housing market as previous years. This is due to there not being a huge divide in policy between the two main parties, and neither having many specifics on housing other than a focus on reforming the private rental sector and boosting housing supply.
Zoopla do not expect buyers currently in the sales process to pull out, with 392,000 homes in the sales pipeline and working their way to completion in 2024, irrespective of any political uncertainty.
The incentive to move remains for many households - particularly first-time buyers who are escaping rapid growth in rent costs, and those looking to up-size who delayed moving last year when mortgage rates increased.
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