Now that MPs have voted and the date has been set, there is no denying that there will be a nationwide vote as early as June 2017 to determine which political party will be elected to run the country going forward. However, this impending event has the power to be one of the most important elections in UK history, as the political party which wins power will also by default be given the unenviable job of attempting to navigate the turbulent negotiations as Britain gears up to leave the European Union.
This begs the question: what affect will yet another significant political upheaval have on the UK—and particularly, on its buoyant and consistently-growing property market?
Elections and the property market
At this stage it is perhaps too early to say how this particular General Election will affect the property market in its current state, but it does have to be said that property has been affected by political elections in the past—albeit in a trivial and transient way. Alison Platt, of estate agency Countrywide, has recognised past housing trends during election cycles, which “show a clear correlation between General Elections and the level of transactions in the property market. Analysis of sales transactions over the course of the last nine General Elections indicates there will be a dip in activity pre-election”.
However, to invert the popular idiom: “What goes down must come back up”—and this is indeed the case in such a buoyant market as the UK housing market has proved itself to be. In every other occasion in recent history, the market’s temporary sluggishness during which time buyers and sellers exercise caution in the weeks before a major political event as they wait to see what will happen suddenly ceases to exist in the immediate aftermath of said event. Once the dice have been rolled, a conclusion has been found and the dust has settled, the market has had an exceptional track-record of bouncing back and reaching new highs, with CityAM stating that such high levels are typically found in the first three months immediately following the election of a new Government, which could (and has in the past) seen growth as high as 13%.
Furthermore, Platt then goes on to acknowledge that this trend of a pre-election dip may not be as apparent this time around, given the election’s relatively short timescale compared to previous elections: “What’s different here is that we don’t have the same long run-up to the election—it’s around seven weeks between the calling of the election and the ballot date, compared to the usual six months. The short time-scale between now and the election also means that any consumer hesitancy pre-election will have less of an impact on transactions overall”.
It seems that this overt positivity is shared by many a property experts, with Jeremy Leaf of the Royal Institute of Chartered Surveyors (RICS) quoted in Zoopla as saying: “If the result is decisive either way, that will give the Government a greater mandate for its existing policies and is likely to result in a surge in activity in the housing market at least for the honeymoon period afterwards.”
Russell Quirk, chief executive of eMoov, echoed the sentiment: “The eradication of questions around the legitimacy of the EU vote, a second referendum and any other opposition will only serve to buoy the housing market further and should result in a large degree of stability going forwards.”
Case in point: The ‘Brexit’ effect
As we’ve seen in the weeks and months leading on from the ‘Brexit’ vote, what happens in Whitehall doesn’t necessarily have a direct impact on the housing market. After the UK chose to leave the European Union in June 2016, many an industry expert predicted this would be a death knell for the UK property market which had up to that point been enjoying tremendous growth for decades, with many predicting as much as a 6% drop in property prices as a result of the turbulent political landscape. However, that wasn’t to be—property proved its resilience in the face of political uncertainty, retaining much of its value across almost all markets nationwide, and in some cases completely defying speculators by experiencing growth.
Given that the much-maligned slowdown widely predicted in post-Brexit Britain didn’t happen, this goes to show that politics can in some cases be widely distanced from the UK property market, which even to this day is continuing to defy trends despite potentially detrimental external factors. With that in mind, it seems that this too could be the case with the impending election in June 2017.
Research shows that in the past there has been a clear trend of buyer and seller trepidation as they hold off making any market transactions until the outcome of the election is clear, after which time the market springs back to business as usual, experiencing a significant quarterly surge to boot. But June’s General Election could, like Brexit, defy trends and speculators alike. A survey conducted by online estate agent eMoov.co.uk reports that a majority of UK buyers and sellers would not change their plans due to the snap General Election, with 57% of sellers and 59% of purchasers still showing their commitment to making a transaction during the election period, compared to 18% of sellers and an identical number of buyers who say that the election will now force them to put their plans on hold.
Whatever the outcome of the General Election, one thing is certain: the sentiment in the wider property market is one of positivity, with most experts steadfast in their belief that activity may suffer a slight dip as the country gears up to the election, but will bounce back with a vengeance as soon as it is known which way the pendulum has swung.
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