Homeowners looking to sell could be better off doing so before the next general election, according to new research published by the estate agent Winkworth.
While we don’t know when that will be yet, those planning to move may be concerned that any changes in policy or general uncertainty could affect their plans.
The research, conducted by analysts Dataloft, looked at house price changes before and after the seven previous general elections, in the regions where Winkworth has offices.
That includes Greater London, the South East, South West, East Anglia and Northamptonshire.
In those areas, it found that property price growth was more likely to go down in the three months after the country went to the polls than it was to go up.
All photos from Getty Images: Credit top left to right – Photo by Colin Davey. Anthony Harvey, Scott Barbour, Matt Cardy. From bottom left to right – photo by Sean Gallup, Mustafa Yalcin/Anadolu Agency, Nicolas Economou/NurPhoto and Stefan Rousseau
Looking at the most recent election in 2019, it found that the so-called ‘Boris bounce’ in the property market after the last General Election failed to deliver.
In the three months prior to the December 2019 election, where Johnson’s opponent was Labour’s Jeremy Corbyn, average UK prices rose by 4.2 per cent.
However, in the three months following the election, average prices rose by just 0.7 per cent. In prime central London, prices fell 9.4 per cent in the three months following Boris’ election.
Dominic Agace, chief executive at Winkworth said: ‘The effect of a general election is to distract people in the three months leading up to polling day.
‘Politicians are pushing policies to win votes, and the politics can be more extreme than the reality of what happens once a party is in power.’
Prices rose by almost the same percentage in advance of Tony Blair’s win in 1997, at 4.4 per cent – only to fall to 1.7 per cent in the three months after.
The research looked at house price changes for three months before and after the last seven elections across London, the South East, South West, East Anglia and Northamptonshire
House price growth also tailed off following elections in 2001, when Blair won again, and in 2015 when David Cameron’s Conservatives were handed sole control following five years of coalition.
However, in the 2005, 2010 and 2017 elections, prices rose faster in the following three months.
In the three months prior to each of the last seven elections, the average price per square foot has risen by 20.2 per cent in total, Winkworth said.
Meanwhile in the three months post election the price per square foot has risen by 15 per cent when totted up together.
Winkworth’s experts say this mixed picture suggests that elections might not be the primary driver of price trends – and that ‘waiting to put a property on the market after an election, with the hope of achieving a much higher price, could be a risky strategy’.
The Boris dip? The study found the so-called Boris bounce in the property market after the last general election failed to deliver
The data, which is based on Land Registry figures, has some limitations. Land Registry data is based on sold prices, and therefore may relate to sales that were agreed months before they appeared on the record.
This means the homes sold in the three months following an election might have been agreed before the election, and the homes sold before the election might have been agreed up to six or more months before the election.
What does UK-wide house price data say?
We decided to take a look at the Land Registry figures for all of the UK and look at what prices did in the years before and after the previous seven general elections.
These figures include homes sold across the whole of the UK, and not just in the South of England.
This analysis suggests that house prices may be more likely to do better following an election than prior to one.
Taking into account each year leading up to the last seven elections, house prices rose by a collective 44 per cent, equating to a yearly average of just over 6 per cent for each year before a general election.
However, in each year following the last seven general elections, house prices rose by a collective 53 per cent – equating to a yearly average of just over 7.5 per cent.
Ultimately, house prices are more likely to be impacted by other factors, rather than general elections.
For example, in the year following Boris Johnson’s election in December 2019, house prices across the whole of the UK rose by 6.99 per cent.
Rather than being owed to a Boris bounce, this is more likely down to the stamp duty holiday that began in July 2020 – alongside the race for space and home moving boom that began during the pandemic.
Do elections slow housing market activity?
Aside from house price changes, Winkworth’s analysis also picked up that pre-election uncertainty has a short-term effect of slowing the number of sales in the three to four months before voting day.
It found this pattern held true for six out of the last seven elections.
Once the election result is known, the increased certainty over the political landscape and policies will normally allow the markets to pick up momentum again.
However Dataloft’s report also suggests that the time of year rather may have more of an impact than the fact there is a general election.
Transaction hit? Pre-election uncertainty has a short-term impact slowing the number of sales in the three to four months before voting day
Postponing selling or buying a home until after the election could mean missing out on the best time of year in the property calendar, with spring typically being the best period for home sales.
The report found that over the last five years (excluding 2020 due to Covid), 27 per cent of sales took place in spring, the highest of any of the seasons, according to HMRC figures.
Over the same period, properties took an average of just 51 days to sell, compared with 61 days in winter.
Is the upcoming election affecting the market yet?
Jeremy Leaf, north London estate agent and a former Rics residential chairman thinks the uncertainty that comes with elections always causes some people to hold off buying or moving.
However, with the coming election, he hasn’t noticed people changing tack yet – probably because the date is yet to be announced.
‘Elections have been a factor when it comes to decisions to buy and sell homes because they tend to create uncertainty, particularly when we are nearing the expected date,’ says Leaf.
Ed Davey(left), Rishi Sunak (middle) and Sir Keir Starmer (right) will want their party to be seen as the best choice for homeowners, first-time buyers and renters
‘If the bookies are to be believed and there is a change of Government, the pronouncements to date from Labour have indicated a pro-business and particularly pro-building strategy, which if implemented is likely to only benefit the housing market in terms of improving the number of transactions, if not prices.
‘If anything, it is likely to be higher-value transactions and high-net-worth individuals who are most likely to be clobbered for tax rather than the more run-of-the-mill transactions, which form the overwhelming majority of those taking place.
‘However, we haven’t noticed a drop-off in UK or foreign-based investors’ enquiries or interest in buying UK property over the past few months, and don’t expect that to change even though they are proceeding cautiously without building in too much potential gain.
‘Most people are not holding off or changing their minds and waiting until the outcome of the election, although that may change as the date looms.’
Sam Mitchell, chief executive of online estate agent brands Strike and Purplebricks says that there is a danger that as the election looms near, people may start to put plans on hold until after the result.
This could be exacerbated if each party begins making housing commitments such as promising to cut stamp duty or capital gains tax.
‘We anticipate a window of positivity between now and the general election where the market remains strong, with house prices continuing to rise month-on-month and an uptick in buyer demand,’ says Mitchell.
‘In light of the faster-than-anticipated fall in inflation, and the expectation of rate cuts beginning to be priced in from June, we can be optimistic about housing market activity in the coming months.’
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