Historically, general elections are seen as periods of uncertainty, potentially impacting various economic sectors, including the real estate market. However, fresh insights from eXp UK, a prominent estate agency, suggest that the forthcoming election in July is not likely to deter the revival currently underway in the UK property market.
Decades of Steady Growth Post-Elections
The analysis conducted by eXp UK looks into the trends following the last 10 general elections since 1983. The data, adjusted for inflation to provide a more accurate picture, reveals a trend: house prices have typically risen by an average of 5.4% in the year succeeding a general election. This pattern underscores a seemingly robust property market that can withstand the immediate impacts of political changes.
A Look at Historical Trends
Out of the general elections reviewed from 1983 onwards, only two years—1992 and 2010—saw no increase in house prices. These years were exceptional due to the markets still recovering from significant economic downturns, namely the early 1990s recession and the 2008-09 financial crisis. Apart from these anomalies, the post-election year has generally been favorable for house price growth.
The most significant leap in house prices occurred after the 1987 election when Margaret Thatcher secured her third term. Conversely, the smallest increase was observed following Theresa May’s election in June 2017, though growth remained positive.
Recent Market Performance and Future Outlook
eXp UK highlights that the property market has shown signs of promise in 2024, despite the challenges posed by higher mortgage rates. A stable hold on interest rates has helped the market, with mortgage approvals increasing for six consecutive months and house price indices generally moving upwards.
The Impact of Political Stability
Adam Day, the head of eXp UK, points out that while political uncertainty typically has a negative impact on the property market, the regular occurrence of general elections does not parallel the profound uncertainties seen during prolonged political events like Brexit. Elections are often viewed as opportunities for change, which can invigorate the market rather than stall it.
Implications for Home Sellers and Buyers
The findings suggest that home sellers can remain optimistic about the value of their properties post-election. Furthermore, while some buyers might be cautious, choosing to wait out the election in anticipation of potential incentives, the overarching momentum of the property market is expected to continue.
Party Influence on Property Growth
Interestingly, the analysis also touches on the influence of political parties on property growth. Over the past decades, following the election of a Conservative Prime Minister, house prices have risen by an average of 4.6%. This growth rate jumps to 10.9% when a Labour Prime Minister takes office, indicating a potentially higher growth dynamic under Labour leadership.