How will house prices be impacted by the General Election?
:quality(80))
:format(webp):quality(100))
:format(webp):quality(100)){kind=spacer}
:format(webp):quality(100))
:format(webp):quality(100))
:format(webp):quality(100)){kind=spacer}
:format(webp):quality(100)){kind=spacer}
:format(webp):quality(100)){kind=spacer}
The housing market is an interesting and often unpredictable sector that can be significantly influenced by political events, such as general elections.
As the 2024 UK general election has shown, many homeowners and potential buyers are concerned about how the outcome might affect house prices.
This article delves into the historical context of housing market trends around election times, examines the potential impacts of the 2024 general election and provides insights into whether now is a good time to buy or sell a house.
By understanding past trends and current market conditions, homeowners can make more informed decisions during these uncertain times.
Key takeaways:
Historically, the housing market has shown resilience around election times, often stabilising or even experiencing a boost post-election.
Clear election results boost market confidence, leading to increased buyer activity.
High interest rates currently temper price growth by making mortgages less affordable - this is not solely resulted by government policies.
Selling your house via The Property Buying Company is the easiest way to sell a house during economic and political uncertainty.
What happened to the housing market last election?
In the lead up to the last general election in 2019, there was significant uncertainty due to the ongoing Brexit negotiations. This uncertainty led to a slowdown in the housing market, as potential buyers and sellers adopted a wait-and-see approach.
As house price growth slowed, the transaction volumes decreased. Many buyers were hesitant to make financial commitments amidst the political uncertainty. London and the South East in particular, saw more pronounced slowdowns, while other regions with less reliance on international buyers were less affected.
The housing market remained relatively stable during the election period. The focus on the election and Brexit continued to weigh heavily on buyer and seller confidence.
Political parties put forward various housing policies, including proposals for house building, rent controls and changes to property taxation. These proposals generated some discussion but did not immediately impact the market.
But, following the decisive victory of the Conservative Party, there was a noticeable “Boris Bounce” in the housing market. The clarity provided by the election result and the expectation of a more definitive Brexit path boosted market confidence.
There was a surge in buyer inquiries and property listings in the months following the election. Transaction volumes began to increase as the market reacted to the reduced uncertainty.
House prices started to rise steadily in early 2020. The increased market activity and renewed confidence in this growth. However, the positive momentum was soon disrupted by the onset of the COVID-19 pandemic in March 2020. The pandemic brought new uncertainties and challenges to the housing market, overshadowing the post-election recovery.
How many of the Conservatives’ housing policies have they met?
Since the 2019 general election, the Conservative Party has made varying degrees of progress on their housing policy promises.
In their 2019 manifesto, the Conservatives committed to building 1 million homes over five years, targeting 300,000 annually. Despite efforts, this target has not been consistently met, particularly due to the disruption caused by the COVID-19 pandemic. The pandemic led to a temporary slowdown in new construction, resulting in a supply shortage that has contributed to rising house prices as demand outpaces supply.
They also extended the Help to Buy scheme and introduced “First Homes,” which provides more opportunities for first-time buyers. This initiative has helped some young buyers enter the market, increasing activity and demand in the housing sector. However, critics argue that these measures have inflated property prices by increasing demand without a corresponding rise in supply.
The proposed abolition of ‘no-fault’ evictions (Section 21) and leasehold reforms have seen partial progress. The delays and uncertainty in implementing these reforms have left renters in a precarious position. Nevertheless, the intent has raised awareness and led to some improvements in tenant protections. The rental market remains competitive, with high demand and rising rents.
Efforts to improve infrastructure alongside housing development have had mixed results. While there have been investments in infrastructure, these have not always aligned timely or sufficiently with housing developments. This misalignment has sometimes led to overburdened local services and infrastructure, affecting the desirability and functionality of new housing developments.
Proposed planning reforms aimed at speeding up development have faced significant opposition and revisions. The uncertainty and delays associated with these reforms have created a cautious environment among developers, and its overall influence on the housing market has been minimal.
Investments in energy efficiency improvements for homes have been slow and faced bureaucratic hurdles. While the intention is to reduce energy costs and improve living conditions, the slow rollout has meant that the anticipated benefits to the housing market and homeowners has not yet been fully realised, delaying potential improvements in housing quality and sustainability.
How do General Elections affect house prices?
Before we talk about the effect of the General Election on house prices now, we must look at how the housing market has responded to previous general elections and varying political climates over several decades.
By looking at multiple election cycles, we can identify patterns and understand how political stability, policy promises and government changes influence the housing market.
1970s: Economic turmoil & housing market instability
The 1970’s were marked by economic instability, high inflation and fluctuating interest rates. The housing market experienced significant volatility. The 1974 election, which resulted in a hung parliament, created uncertainty that impacted housing market confidence.
Policies focused on social housing and rent controls, but the economic environment overshadowed these efforts, leading to a sluggish housing market.
1980s: Thatcher Era and market liberalisation
The 1980s, under Margaret Thatcher’s Conservative government, saw significant housing market changes. The introduction of the Right to Buy scheme in 1980 allowed council tenants to purchase their homes at a discount, drastically increasing homeownership rates.
The 1983 and 1987 elections, which reinforced Conservative dominance, boosted market confidence. Deregulation and tax incentives spurred private housing investment leading to a housing boom. However, this period also saw rising inequality in housing affordability.
1990s: Recession and recovery
The early 1990s recession, following the 1992 election, caused house prices to plummet. High interest rates and unemployment led to a housing market downturn. The Conservative government’s policies focused on economic recovery and reducing inflation, which eventually stabilised the market.
The late 1990s saw a recovery in house prices, supported by economic growth and declining interest rates under Tony Blair’s Labour government elected in 1997.
2000s: Housing boom and financial crisis
The early 200s experienced a housing boom, driven by low-interest rates, easy credit and economic growth. The 2001 and 2005 elections, which resulted in Labour victories, saw policies promoting homeownership and urban regeneration.
However, the 2008 financial crisis led to a severe housing market crash. The 2010 election, which brought a Conservative-Liberal Democrat coalition, focused on austerity measures and economic recovery.
2010s: Brexit and market uncertainty
The 2010s were dominated by Brexit-related uncertainty. The 2016 EU referendum and the subsequent 2017 and 2019 elections created significant political and economic uncertainty. The housing market experienced fluctuating demand and price growth with regional disparities.
The 2019 election, leading to a Conservative majority, initially boosted market confidence, known as the “Boris Bounce.” However, the COVID-19 pandemic soon disrupted this momentum, leading to a temporary market downturn.
What trends emerge?
Interest rates are a critical factor influencing the housing market. Lower interest rates reduce mortgage costs, making borrowing more affordable and stimulating demand. Conversely, higher rates increase borrowing costs, dampening market activity.
The Bank of England’s monetary policy, often influenced by economic conditions and government fiscal policy, plays an important role. For example, the low interest rates of the early 2000s fueled a housing boom, while the high rates of the early 1990s contributed to a market downturn.
Employment rates also significantly impact the housing market. Higher employment levels increase consumer confidence and purchasing power, driving demand for housing. Conversely, high unemployment can lead to decreased demand and increased defaults on mortgages.
The economic policies of different governments can influence employment rates. For example, austerity measures in the early 2010s aimed at reducing government debt led to public sector job cuts, impacting housing demand.
Inflation also affects the housing market through its impact on interest rates and purchasing power. High inflation often leads to higher interest rates as central banks attempt to control price increases. This can reduce housing affordability and demand.
For instance, the high inflation of the 1970’s led to high-interest rates, negatively affecting the housing market. Conversely, periods of low inflation, such as in the 2010s, often coincide with lower interest rates, supporting housing demand.
Will house prices rise after the election?
It’s too early to definitely say how the general election will impact UK house prices. However, early signs suggest that the market remains active despite ongoing economic challenges.
Before Rishi Sunak announced the general election, the housing market was experiencing a growing gap in house price inflation between the North and South of England, with a less vigorous than usual increase in activity and prices during the spring.
Factors influencing post-election house prices
Political stability and market confidence:
A decisive election outcome, whether it results in a majority government or a clear mandate, typically boosts market confidence. This confidence can lead to increased buyer activity and potentially rising house prices.
If the election results in a hung parliament or significant political uncertainty, market confidence may wane, possibly leading to slower price growth or even a temporary decline.
Economic policies:
The housing policies proposed by the winning party will indeed impact the market. FOr instance, if the new government introduces measures to build 1.6 million new homes and boost housing supply, this could help stabilise or even reduce house prices in the long term by increasing availability.
Conversely, policies that increase demand without addressing supply constraints (like building more affordable housing, and not housing for the middle class) could lead to higher prices.
Interest rates:
The Bank of England’s response to the election and subsequent economic conditions will play an important role. Lower interest rates tend to make mortgages more affordable, increasing demand and driving up prices.
Higher rates have the opposite effect. Currently, high interest rates have been making mortgages less affordable, which is tempering price growth. However, there is a sense of cautious optimism in the air, with hope that prices might exceed expectations in 2024, partially due to buyers’ increased pragmatism.
2000s: Housing boom and financial crisis
The early 200s experienced a housing boom, driven by low-interest rates, easy credit and economic growth. The 2001 and 2005 elections, which resulted in Labour victories, saw policies promoting homeownership and urban regeneration.
However, the 2008 financial crisis led to a severe housing market crash. The 2010 election, which brought a Conservative-Liberal Democrat coalition, focused on austerity measures and economic recovery.
2010s: Brexit and market uncertainty
The 2010s were dominated by Brexit-related uncertainty. The 2016 EU referendum and the subsequent 2017 and 2019 elections created significant political and economic uncertainty. The housing market experienced fluctuating demand and price growth with regional disparities.
The 2019 election, leading to a Conservative majority, initially boosted market confidence, known as the “Boris Bounce.” However, the COVID-19 pandemic soon disrupted this momentum, leading to a temporary market downturn.
Historically, housing markets have shown resilience and adaptability around election times, often establishing or even experiencing a post-election boost as uncertainty is resolved.
Research by the institute for Fiscal Studies (IFS) highlights a concerning decline in homeownership among younger and middle-aged adults, emphasising the ongoing challenges faced by those trying to get on the property ladder.
Initial data from property firm TwentyEA indicates that the housing market has been resilient despite the election. In the two weeks following the announcement, the number of properties Sold Subject to Contract (SSTC) and new instructions increased compared to the same period in 2023. This suggests that both demand and supply are returning to pre-pandemic levels.
While the full impact of the election on house prices remains unclear, the early data suggests a resilient market with increased activity compared to previous years. As more time passes and the new government’s policies take shape, we will gain a clearer picture of the long-term effects on the housing market.
Mortgage approval rates around the general election
While primarily set by lenders and influenced by economic factors like the Bank of England base rate, mortgage rates can be indirectly affected by political events like elections due to increased uncertainty.
Since the announcement of the General Election on May 22nd, there have been minor fluctuations in swap rates and a slight increase in average fixed mortgage rates among major lenders.
Housing market trends
Historical data from Nationwide suggests that overall house price trends tend to remain stable in the months surrounding elections, with the exception of the pandemic-induced drop in 2019. However, mortgage approvals show less consistent patterns with notable decreases after the 1997 and 2019 elections.
Market sentiment
Despite these potential fluctuations, industry experts and recent surveys suggest that the upcoming election is unlikely to significantly disrupt the housing market. Most buyers and sellers prioritise their own plans and timelines over political events with 95% of prospective buyers indicating that the election wouldn’t change their plans.
Rightmove’s data further supports this sentiment, showing steady demand in the lead-up to previous elections and a significant surge in buyer inquiries immediately after.
While some fluctuations in mortgage rates and housing market activity may occur, the overall consensus suggests that the upcoming General Election is unlikely to significantly disrupt the housing market.
Many buyers and sellers remain determined to proceed with their plans regardless of political events, indicating a resilient and active market in the coming months.
If Labour wins the general election, what does this mean for housing?
Labour’s manifesto aims to build 1.5 million new homes, focusing on planning and land reform. They plan to set mandatory targets and speed up applications for ‘grey belt’ land, as well as funding for local authorities and mayors which will support housing plans.
Their strategy includes higher stamp duty for non-UK residents and a scheme giving local buyers priority, although this may push out some foreign investors. Labour also plans to invest in energy efficiency, expand renter protections and help first time buyers with mortgage support:
Housing supply:
Labour plans to build 1.5 million new homes over the next parliament, including new towns. They will update the National Policy Planning Framework to restore mandatory housing targets and ensure local planning authorities have up-to-date Local Plans.
While local communities will shape housebuilding, Labour is prepared to use intervention powers if necessary. Funding for additional planning officers will come from an increased Stamp Duty surcharge on non-UK residents.
More homes can help meet the high demand, potentially reducing house prices and making homes more affordable, all while creating jobs and boosting the economy. However, large-scale construction will strain resources and they may also fail to meet their ambitious plans to build.
Land reforms:
Brownfield first approach:
Labour will prioritise developing used land and fast-track urban brownfield sites. They plan to manage greenbelt land strategically, focusing on lower quality ‘grey belt’ areas for development and ensuring community and environmental benefits.
Compulsory Purchase Reform:
Labour will reform compulsory purchase compensation rules to improve land assembly and expedite site delivery, including removing ‘hope value’ in landowner compensation.
Reforming the planning system will ease administrative burdens and make more land available for development, but changes in planning laws can face resistance from local communities worried about overdevelopment.
Leasehold Reform:
Labour will protect leaseholders from building safety remediation costs and accelerate remediation efforts. They will enact the Law Commission’s proposals on leasehold enfranchisement, right to manage and commonhold for new flats, and reform ground rents and estate charges.
Home ownership:
First-time buyers:
First-time buyers will get priority in purchasing homes, ending pre-construction sales to international investors. Labour will introduce a mortgage guarantee scheme to support first-time buyers struggling with deposits.
Social housing:
Labour commits to building new social rented homes and protecting existing stock by reviewing the right to buy discounts and increasing protections for new social housing.
Renters:
Labour will abolish Section 21 ‘no fault’ evictions, empowering renters to challenge unreasonable rent increases, and extend ‘Awaab’s Law’ to the private sector to raise standards.
As we saw with the amount of landlords exiting the rental market earlier this year, the abolishment of no fault evictions comes at price. There may be fewer rental properties due to their being less landlords.
What happens if the conservatives win the election?
If the Conservative Party win the next general election, their housing policies would increase housing supply which could help stabilise prices. The support for small builders and infrastructure development may boost local economies, and reforms may create a fairer rental market and protect leaseholders.
But, ambitious targets might be challenging to achieve within existing constraints. Environmental and regulatory changes could face opposition and implementation challenges and the short-term measures may not address long-term structural issues in the housing market. Here’s a closer look at their proposed policies:
Housing supply:
Building 1.6 Million Homes:
The Conservative Party is looking to build £1.6 million homes, increasing the supply of homes can help meet demand, potentially stabilising or reducing house prices. But, achieving over 300,000 new homes a year may be difficult due to existing planning and construction constraints.
Abolishing Nutrient Neutrality Rules:
They have also promised to unlock 100,000 new homes quickly, boosting supply through abolishing Nutrient Neutrality rules. This could however mean that if environmental concerns arise, mitigation fees may not fully address pollution issues.
Brownfield Land Development:
One topic, building Brownfield land developments will encourage urban development and efficient use of land, possibly revitalising urban areas, but fast-tracking planning could face local opposition and logistical hurdles.
Support for Local and Small Builders:
The support for local and small builders will increase diversity in builders and can boost local economies and speed up construction. Smaller builders might still struggle with financing and regulatory compliance.
Infrastructure Levy:
The infrastructure levy looks to ensure necessary infrastructure (GP surgeries, roads) are built alongside new homes, in a bid to enhance community support, effective implementation and adequate funding are vital for its success.
Affordable Homes Programme:
An issue both parties seem to focus on, is providing affordable housing to help lower-income families and support housing market stability. Securing continuous funding and effective project management are necessary.
Managing Holiday Lets:
And finally, the Conservatives have planned to help maintain community integrity and prevent housing shortages for locals by managing Holiday Lets.
Homeownership:
Stamp Duty Threshold increase:
The proposed Stamp Duty threshold increase looks to reduce costs for first-time buyers, making homeownership more accessible. This could lead to short-term price increases as more buyers enter the market.
Capital Gains Tax relief for landlords:
The aim is to encourage landlords to sell to tenants, aiding renters in becoming homeowners, but this short-term measure may not significantly impact the long-term housing supply.
Renters:
Social Housing Allocation tests:
The Social Housing allocation tests look to ensure a fairer distribution of social housing, prioritising local and UK connections. But implementing and enforcing these tests will be complex.
Anti-social behaviour measures:
The Conservatives look to improve community quality by addressing disruptive behaviour in social housing, but balancing tenant rights with community needs will need to be done at a community based level.
Renters Reform Bill:
Abolishing Section 21 evictions and strengthening tenant protections can create a fairer rental market, but ensuring landlords still have sufficient rights to manage properties effectively will be the largest challenge here.
Leasehold Reform:
Ground Rent Cap:
The Ground Rent Cap looks to provide financial relief to leaseholders, enhancing housing affordability. But, transition to new terms must be managed carefully to avoid market disruptions.
Building safety:
Changes to building safety looks to ensure continued support for leaseholders affected by historic building safety issues, improving safety and market confidence.
Which is better for the housing market: Conservatives or Labour?
Both Labour and Conservative housing policies aim to increase housing supply and address affordability issues, but they differ in their approaches to planning, support for buyers and renter protections.
Labour focuses more on large-scale building projects, local buyer prioritisation, and extensive renter protections. In contrast, the Conservatives emphasise small builders, planning efficiency, and balanced renter protections.
The housing market could see increased supply and stabilised prices under both parties, but the effectiveness of these policies will depend on implementation and overcoming existing constraints.
| Policy | Labour | Conservatives |
|---|---|---|
| Housing Supply | Build 1.5 million new homes, focus on planning and land reform, new towns and ‘grey site’ developments. | Build 1.6 million homes, abolish nutrient neutrality rules to unlock 100,000 new homes, focus on brownfield development. |
| Stamp Duty | Higher stamp duty for non-UK residents & private schools. | Increase Stamp Duty threshold for first-time buyers. |
| Buyer Prioritisation | Priority for local buyers, end pre-construction sales to international investors. | Temporary Capital Gains Tax relief for landlords selling to tenants. |
| Energy Efficiency | Invest £6.6 billion in energy efficiency, stricter standards for the private rented sector, and collaborate with the private sector for home upgrades. | Invest £6 billion in energy efficiency upgrades, offer vouchers for home improvements. |
| Renter Protections | Abolish Section 21 ‘no fault’ evictions, extend ‘Awaab’s Law’ to private sector, empower renters to challenge rent increases. | Social housing allocation tests, anti-social behaviour measures, abolish Section 21 evictions, protect tenant rights. |
| Leasehold Reform | Protect leaseholders from building safety remediation costs, enact Law Commission’s proposals, reform ground rents and estate charges. | Cap ground rents, support leaseholders with historical building safety issues. |
| Planning and Land Reform | Update National Policy Planning Framework, restore mandatory housing targets, intervene if necessary, fast track urban brownfield sites. | Use infrastructure levy for local amenities, fast track planning for urban areas, and support small builders. |
| Social Housing | Build new social rented homes, protect existing stock, review the right to buy discounts, increase protections for new social housing. | Fair distribution of social housing, manage holiday lets to maintain community integrity. |
| Support for First-Time Buyers | Mortgage guarantee scheme to support deposits for first-time buyers. | Stamp Duty threshold increase to reduce costs for first time buyers. |
Should you sell now, or wait until 2025?
Deciding whether to sell your house now or wait until 2025 involves looking at the current market conditions, potential impacts of the upcoming 2024 general election and broader economic factors.
Currently, the housing market remains active despite ongoing economic challenges, with increased activity and a return to pre-pandemic levels of demand and supply. However, high interest rates have made mortgages less affordable, which might temper price growth.
Selling now could help you avoid potential market slowdowns if interest rates continue to rise or if economic conditions worsen. If you need to sell quickly due to personal reasons like a job relocation or financial necessity, you should consider selling your house to a cash house buyer like us. We can help you sell in as little as 7 days, no matter the market conditions.
Will political change affect my ability to sell?
Elections often create uncertainty, which can lead to temporary slowdowns in the housing market as buyers and sellers adopt a wait-and-see approach. If you believe the 2024 general election will lead to significant uncertainty, selling before it could help you avoid this hesitation period.
However, historical data shows that housing markets often stabilise or even experience a boost post-election as political uncertainty is resolved. The Boris Bounche after the 2019 election is an example where market confidence improved, leading to increased activity and rising prices.
If you anticipate a similar post-election boost, waiting until 2025 could be beneficial when selling on the open market.
Meanwhile, broader economic conditions, such as employment rates, inflation and interest rates will play a vital role in your decision. The Bank of England’s monetary policy and interest rate decisions will impact mortgage affordability and housing demand.
If economic conditions improve post-election and interest rates decrease, waiting until 2025 could allow you to capitalise on a potentially stronger market. Conversely, if economic conditions deteriorate, selling now might be the better option.
What’s the best way to sell during an uncertain market?
Selling your home to a cash house buyer can be one of the best ways to sell your home in an uncertain market due to several reasons. Cash buyers (like ourselves) can offer a quick and guaranteed sale, which is advantageous when the market is volatile and traditional buyers might struggle with securing financing.
The speed and certainty of our cash purchases can significantly reduce the stress and unpredictability that accompanies the open market selling process. We have the cash funds readily available to purchase your home. No property chains. No stress. Sell in 7 days.
Furthermore, as one of the UK’s leading cash house buyers wecan buy your house as-is, which means you won’t need to invest any additional time or money into repairs or renovations. This can help you to sell quickly, especially if estate agents have told you, you need to repair it before it goes on the market.
We prioritise our customer care, which is why we are the UK’s most highly rated cash house buyer. As proud members of The Property Ombudsman and the National Association of Property Buyers, we ensure that you will always be treated with respect and integrity.
Additionally, we cover all the fees associated with selling your home, including your legal fees. So, will you ‘Go to the Winchester, have a pint, and wait for all of this to blow over,’ or will you take proactive steps to get your house moving before the market moves it for you? The choice is yours, and we’re here to help every step of the way.
:quality(50))