The snap general election this on June the 8th came as a surprise to many, having repercussions on just about all economic activities in the United Kingdom. However, given how volatile the housing market can be, there is a lot to be said as to how the general election will affect house prices in the UK.
It is common for transactions to ease off in the build-up to a general election, as both buyers and sellers wait to see the outcome, which may have rather different effects on house prices. This dip in transactions has been clearly seen in the last nine general elections, and has reduced the number of transactions from one quarter to the next by approximately 13%.
However, the elections being held on the 8th of June are different. This time, there have only been seven weeks between the calling of the election and the ballot date, less than a third of the usual six months. Therefore, such a short timescale between the two dates means that consumers and sellers have had less of an opportunity to hesitate, and therefore less of an opportunity to have an effect on the housing market.
Not only will the short timescale between the dates have an impact, but also the general timing of the election. With Brexit negotiations in the UK’s hope, property prices have responded by flatlining and in some cases declining, even in London. In the long term, the triggering of Article 50 will have a profound impact on the housing market, and can only be expected to stabilise once negotiations are complete – whatever the result.
Assuming a Tory win, which most pundits have suggested, one can expect the number of sales in the market to bounce back to normal levels in the following three months, and then resume to normal levels. However, if the Labour party were to win, the outcome may be very different. Given their pledge to build one million new homes if they win (source), one could expect the supply of available homes to skyrocket, having an impact on demand, and therefore property and rent prices.
It is fair to say that the outcome of the general election will certainly have an impact on house prices in the UK, but it is hard to predict exactly what they will be. The general expectation is for a lot of fluctuation, and ebbing and flowing of the market.