Will there be a post-election housing boom?
With two parties vying for leadership, and a plethora of promises and policies on the table, there are a lot of what-ifs on the horizon.
On 22 May, Rishi Sunak called a general election to be held on 4 July. The announcement came as a surprise to many, with some Conservative MPs reportedly caught off guard by the news.
Though the move felt sudden, the announcement came on the same day as inflation figures, with the new 2.3% low used as evidence to demonstrate Conservative policies in action. Our interest doesn’t lie in the why, but rather, what happens now.
The biggest issue we want to tackle is what the election, and the post-election landscape, will bring to the housing market.
The impact of elections on the housing market
The question is, do elections really have an impact on the housing market? While we assume they do, the reality isn’t as black and white. Historically, we’ve seen little fluctuation in house sales pre-election, though 2019 did introduce the ‘Boris bounce,’ a post-election increase in house prices.
A client survey by Savills indicated an overall ambivalence towards the prospect of a general election, with at least 79% of respondents noting that it would have no impact on their commitment to move over the next year.
That being said, it’s entirely likely that we’ll see a base rate drop a mere two weeks before the election date, which could see a drop in mortgage rates, and thus, an influx of movement in the market. In this case, any impact on the housing market would come from interest rates, not elections. This is made more potent by the fact that we could see the first of 2-3 cuts for 2024 this summer, economic outlook depending.
Consumer sentiment and market movement
The GfK Consumer Confidence survey, conducted in May, shows a rise in British consumer confidence - reaching a two and a half year peak. It’s worth noting that the survey concluded before the announcement of the upcoming election. Consumers feel that conditions are improving, and this confidence could see a much needed injection of life in the market.
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What we may encounter is election jitters, with those nearing completion on house purchases pushing to finalise things before any decisions are made. Alternatively, those just starting out might prefer to wait until after the dust settles, possibly delaying their decisions until autumn.
Potential election impacts on future housebuilding
The UKs political parties don’t have drastically different housing policies, which implies that it’s unlikely there will be a significant shake-up of the market through policy itself. That being said, no matter the result, the post-election landscape often becomes clearer and more optimistic. This could all factor into decision-making processes when purchasing homes.
It’s a fresh start across the board, and many take this to heart and use it as an opportunity to wipe their own slates.
Even if a new government takes power, the overall economy is unlikely to experience a major shift in the short-term. Where we’ll likely see shifts is in the long-term. For example, Labour’s plan to build 1.5 million homes in five years could reshape the housing market as we know it - though it is a lofty goal. In the same vein, the Conservatives have said that they’re considering reinstating Help to Buy, which would be the much needed support first time buyers have been looking for.
Mobeen Akram, New Homes Director at Mortgage Advice Bureau, says:
"It's promising to see that housing is at the forefront of the government's mind, and we've seen a number of pledges across the board. Some of the latest, such as the Conservative's 1.6 million home promise over the next parliament, are proof that housing is not just topical, it's necessary. Labour too, have prioritised freeing up grey belt land for building. Our hope is that the interest in building new homes continues long after the election, as the industry sorely needs more support."
Only time will tell what the rest of the year is going to bring, but a new government, one way or another, is the ideal time to have conversations about policy, much needed change, and pushing for priorities in housing.
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