The Prime Minister may finally have called a General Election, but is the uncertainty of who will be in Downing Street six weeks from now likely to help or hinder the UK property market?
It’s been a rollercoaster few years for the UK electorate. Since 2015, the country has witnessed three General Election Campaigns and now faces a fourth, double what would have occurred in normal times. The property market though, has not historically suffered because of it, according to research done by Rightmove on the 2015 and 2019 General Elections.
The two months leading up to the 2015 GE saw buyer demand for UK property rise by 5% year on year in March, and 6% in April. The election month itself saw this number leap to 9%, and by June that needle moved to 18%.
2019 began less dramatically, with a 1% year on year increase in October moving to just 4% by November. However, by December this had risen t0 13% and in January peaked at 14%
However, since those elections, the UK has suffered the upheavals of a Global Pandemic and the knock-on effects of a war in Ukraine which shows little signs of ending any time soon. The cost of living has risen significantly, and the after shocks of Liz Truss and Kwasi Kwarteng’s disastrous mini budget are still felt in mortgage rates higher than they have been in over a decade and a Bank of England Base Rate which has stubbornly refused to come down since peaking at the current level of 5.25%.
Yet, UK property prices have remained broadly level, even through all of this turmoil. Though the general trend of rising since March 2014 levelled off in September 2022, they have not dipped significantly since, according to Zoopla. The number of transactions, however, dipped significantly towards the end of 2023, dipping below the levels of 2019 though remaining above the slump seen in the aftermath of the Covid SDLT waiver.
Of course, recent news of a fall in UK inflation has given the government some hope, and may indeed have been the trigger for the Prime Minister finally calling an election the opposition had been pressing for incessantly for months. Should the Bank of England choose to finally drop the base rate, even by a quarter of a percent, the impact could be fairly immediate. Lower mortgage rates and prices which currently are languishing lower than they might could combine with the catalyst of a General Election to create a ‘sweet spot’ which sees a rapid growth in demand.
Tim Bannister, Rightmove’s property expert, 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.”
He may be right. Despite what they might like to believe in their respective corridors of power, the actual colour of rosette which takes over at No.10 may make little difference to the optimism or otherwise of buyers or the buoyancy of the market. Instead, interest rates, inflation, and the legislative intentions of whoever is in charge moving forward may be the really important factors in determining how the market performs.
