With the date now set for the next UK general election on 4 July 2024, many current and prospective homeowners will be wondering what impact it is likely to have on property prices should they vote for the Conservatives led by Rishi Sunak, Sir Keir Starmer’s Labour, the Liberal Democrats under Sir Ed Davey or Reform UK headed up by Nigel Farage, or their local Green Party, SNP, Plaid Cymru or independent candidates.
Changes in government following a general election in the UK have historically impacted the housing market in various ways, influenced by shifts in economic policy, market confidence, and specific housing policies.
Here are some examples from recent decades:
1997 General Election (Labour Victory)
When Tony Blair’s Labour Party won a landslide victory in 1997, there was a significant impact on the housing market. The new government introduced policies to boost economic growth and stability, leading to increased consumer confidence. The period following this election saw substantial house price inflation, with annual growth rates in house prices reaching double digits in the early 2000s. Factors contributing to this included low interest rates, rising incomes, and strong economic performance.
2010 General Election (Conservative-Liberal Democrat Coalition)
The 2010 election resulted in a coalition government between the Conservative Party and the Liberal Democrats. This transition came during a period of economic uncertainty following the 2008 financial crisis. The coalition implemented austerity measures and introduced policies to stabilise the economy. Initially, house prices were relatively subdued due to economic conditions and restricted lending. However, from around 2013 onwards, house prices began to rise significantly, partly due to schemes like Help to Buy which were introduced by the coalition to stimulate the housing market and help first-time buyers get on the property ladder.
3. 2015 General Election (Conservative Majority)
David Cameron’s Conservative Party won a majority in the 2015 election. The victory brought about a degree of political stability, and the government continued policies aimed at supporting the housing market. During this period, house prices continued to increase, especially in London and the South East, driven by a combination of economic recovery, low-interest rates, and continued demand.
4. 2016 Brexit Referendum and 2017 General Election (Conservative Minority)
Although not a general election, the 2016 Brexit referendum had a profound impact on the housing market, creating uncertainty. The 2017 election, which resulted in a Conservative minority government, furthered this uncertainty. While the long-term impact of Brexit on house prices is still debated, the immediate aftermath saw a slowdown in price growth, particularly in London, due to concerns about the economic impact of leaving the EU.
5. 2019 General Election (Conservative Majority)
Boris Johnson’s Conservative Party won a decisive victory in December 2019. The result brought an end to the political deadlock over Brexit, leading to a “Boris bounce” in market confidence. Despite the subsequent COVID-19 pandemic, the housing market showed resilience. House prices saw strong growth during the pandemic, partly driven by government interventions such as the Stamp Duty holiday and low-interest rates.
So it would seem that there are a number of factors which can influence the value of our homes post-election, including:
- Economic Policies: Government policies on taxes, spending, and economic management have a direct impact on consumer confidence and disposable incomes, which in turn affect housing demand.
- Housing Policies: Specific measures targeting the housing market, such as Help to Buy, shared ownership schemes, and changes in Stamp Duty, can stimulate or cool the market.
- Political Stability: General elections that result in clear, stable government often boost market confidence, while uncertainty (e.g., coalitions or hung parliaments) can dampen house price growth.
- Macroeconomic Conditions: Broader economic conditions, including interest rates, employment rates, and economic growth, significantly influence the housing market regardless of government changes.
- Global political and socio-economic change: Seen most significantly in the wake of the 2008 financial crisis, during the Covid-19 pandemic and the rising inflation and cost of living crisis following the Russian invasion of Ukraine in 2022.
So, what can we expect after the election on 4 July 2024?
Based on the most recent election periods in 2015 and 2019, we can likely expect relatively little short-term impact on the housing market.
Indeed, the run-up to both elections on 7 May 2015 and 12 December 2019 saw house hunter demand remain consistent and, according to property portal Rightmove, there was a significant increase in year-on-year demand in the months that followed each election (up 18% in June 2015 and 14% in January 2020).
Given the unprecedented social, political and economic change we have seen since 2020, including a global pandemic, a cost of living crisis and conflict in Ukraine and Israel, the past four years has seen significant fluctuations in both house prices and affordability, although we have begun to see signs of stability after the disastrous 2022 mini-budget from Liz Truss and Kwasi Kwarteng. Prospective buyers are not to be deterred either, with around 95% of those surveyed stating that the upcoming election will not change their plans.
Indications from previous elections suggest the market will be in a positive position in the coming summer months, particularly if interest rates, which are at their highest level for 16 years, fall as expected.
The knock-on effect for mortgage rates, coupled with a continued shortage of housing stock in the UK, has led to predictions of a modest average house price growth of around 2.5% by the end of 2024, climbing to 3.5% in 2025.
And in the longer term? As we have seen previously, while changes in government can impact the housing market, the full extent and nature of this impact depends on a variety of factors, most importantly the economic context and specific policies implemented by the incoming party.