General Election unlikely to stall property market recovery

Posted on Wednesday, May 29, 2024

Historical analysis has revealed that house prices climb by an average of 5.4% in post-election years. 

Since the 1980s, house prices have climbed by an average of 5.4% in the year that followed a general election, suggesting that this July’s election is unlikely to halt the positive property market momentum that has been building in recent months.

Last week, Prime Minister Rishi Sunak announced that a general election would be held on 4th July this year, prompting many to ponder whether a further stint of political uncertainty could hit the housing market.

Having weathered the storm of higher mortgage rates, the market has shown strong signs of promise so far in 2024, with a hold on interest rates providing a greater degree of stability, causing mortgage approvals to rise for six consecutive months, with house prices also following suit.

However, it’s yet to return to full strength and a reduction in market activity due to election uncertainty could put the brakes on before it does.

The good news is that an analysis of Gov house price data by eXp UK has revealed that an election is unlikely to hurt house prices in the longer term. eXp UK analysed the annual rate of house price growth in the year following the last 10 general elections stretching back to 1983, adjusting for inflation to give a clear view of market performance.

Research from eXp UK shows that home sellers have little to worry about when it comes to an election-induced house price slump, with the average house price increasing by a respectable 5.4% on average following a general election.

In fact, house prices have increased in the year following every general election since 1983 with the exception of two, 1992 and 2010, when the market was still in recovery during these periods after the early 1990s recession (technical recession ending 1991 Q3) and the 2008-09 financial crisis (technical recession ending 2009 Q2).

The highest rate of inflation-adjusted house price growth followed the general election of 1987, when Margaret Thatcher won her third term as PM. In contrast, the lowest rate of positive house price growth following an election came after Theresa May’s election in June 2017.

The analysis by eXp UK shows that whichever party takes power this time around, the market is likely to stand firm. Following the election of a Conservative PM over the last 10 elections, house prices have climbed by 4.6% on average, whilst this growth climbs to 10.9% in years following the election of a Labour PM.

Head of eXp UK, Adam Day, commented: “Political uncertainty can be poisonous for the property market and we saw how years of back and forth over Brexit slowly put the market into a state of deep freeze.

"However, a general election is unlikely to have the same impact and is often viewed by many as a time of opportunity and change, with historical figures showing that the housing market marches on regardless in the year that follows.

"While we may see some buyers choose to sit tight in hopes of further housing market incentives, the upcoming election is unlikely to dent the positive momentum that has been building in recent weeks.”

Via @PropertyReporter