It’s easy to assume that periods of political instability, such as general elections, impact the housing market significantly. The housing market has certainly slowed of late; a recent report has shown house prices have declined for the third consecutive month for the first time since 2009, with annual house price growth being reduced to just 2.1%. Clearly, the housing market is losing momentum. But has the general election been a factor in this, or are there other issues at play?
The report suggests that historically, general elections do not significantly affect the housing market. Rather, there are broader forces at work which are more significant than the election itself. Instead, the report highlights factors such as inflation overtaking wage growth and additional stamp duties on second homes as reasons for the slowing of the market. Of course, there are currently other significant political events occurring, such as Brexit.
Although a general election is a likewise important political event, Brexit is far less of a known quantity and despite Prime Minister Theresa May laying out plans for negotiations, there is no precedent for this and thus no way of knowing what the outcome will be and how the markets will react. General elections, in contrast, are much more predictable; whatever the outcome, the manifestos outline what the effect on the housing market is likely to be.
It’s also important to note that whilst the election has allowed for the key parties to address issues in the property market, such as the need for more affordable housing and better-quality developments, few concrete plans for change have been laid out. The bottom line is that no party has offered a serious and tangible solution, other than vague promises to build more affordable homes.
Even for those who believe the election has impacted the market, there is a final reason this election in particular has not been significant. For the majority of the campaigning period, there has been a real sense in which the election has been considered a foregone conclusion. The Conservatives have carried a strong lead throughout, although this has narrowed considerably in recent days. Their expected landslide majority—which would have put May in a very strong position for both Brexit negotiations and given her a solid mandate for the next five years—may no longer be on the cards, but the Conservatives are still likely to retain power.
Of course, the polls are notoriously unreliable; polls had also predicted that the UK would remain in the EU. However, regardless of what happens on June the 8th, the ultimate conclusion seems to be this general election has not had a significant effect on the UK housing market. Enness will continue to cover the election and will bring up updates on the property market as they occur, whatever the outcome.