As Theresa May was announcing the 8th June general election, my phone rang and a long-term client broke the news and asked me what effect I thought the general election would have on the local housing market.
House prices have an impact on the general election. Theoretically, buoyant property values make homeowners feel wealthier, economic confidence grows, people spend more money on other consumer goods, the economy looks rosier and the current Government gets more votes.
But what of the impact of the general election on house prices?
Pre-election nerves
Looking at Land Registry data for the Mendip district, sales volumes have been dropping since Summer 2016 and annual house price growth is (ignoring December 2016) the lowest we have seen in a year.
This suggests a stuttering market in Mid Somerset where buyers are cautious of over-inflated prices and sellers may need to reset expectations after double digit growth last year and double the sales volume this time last year.
Estate agents are blaming the uncertainty of Brexit for a more muted housing market, but if history is any guide then the forthcoming election may further slow the housing market. Research from previous UK elections shows that on average, and when compared to the level of transactions at the time of an election, transactions have been higher in the period 6 to 12 months prior to and one to six months after an election. But the four months immediately preceding elections have typically seen housing transactions 3%-8% below the level seen at the time of an election.
The uncertainty regarding elections delays a prospective buyers decision to purchase a home.
Post-election surge
But jitters in the housing market, thought to be caused, in part, by the election, do not necessarily translate into subsequent house price falls.
My analysis shows that prices surge around the time of a general election and afterwards as pent up activity is released.
On average, prices 12 months before are 4.9% lower than at an election, while 12 months afterwards they are 8.6% higher.
In no month before an election have average house prices been above those at a time of an election but house prices have always been higher in the months following an election.
Reasons to be cheerful
For anyone thinking of buying a property, lenders are offering fantastic deals right now and for anyone thinking of selling, relatively few properties on the market will hold up prices based on the supply and demand.
About Tom Morgan
Founder of Jungle Property the multi award-winning letting agent based in Glastonbury, Somerset. I am passionate about property and Glastonbury and about providing the very best advice to anyone who wants the best return on a buy-to-let property investment. For an open and brutally honest opinion on anything in the Glastonbury property market please contact me via tom.morgan@jungleproperty.co.uk
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