What a General Election Could Mean for the UK Property Market

26th May 2024

A general election has been called for July 4th and could impact the property market.
With inflation at a three year low of 2.3% and imminent rate cuts on the cards, the economy was looking strong and heading into recovery if not stability.
The degree of influence of the general election depends on the political parties involved, their policies, and the economic context at the time of the election. Here are some potential effects:

Market Uncertainty:
Pre-election Uncertainty: In the lead-up to a general election, uncertainty can cause both buyers and sellers to delay their decisions, leading to a temporary slowdown in market activity.
Post-election Clarity: Once the election results are known, the market might see a rebound if the new government provides clear and favourable policies.

Policy Impacts:
Housing Supply: Policies related to housebuilding and planning regulations can influence the supply of new homes. Parties often promise to build more affordable housing or streamline planning processes, which can increase housing supply over the long term.
Taxation: Changes in property taxes, such as stamp duty, capital gains tax, or buy-to-let regulations, can directly affect market dynamics. For instance, a reduction in stamp duty could stimulate market activity, while increases might dampen demand.
First-Time Buyers: Policies aimed at helping first-time buyers, such as Help to Buy schemes or deposit assistance programs, can increase demand in the lower end of the market.

Economic Policies:
Interest Rates: General elections can influence broader economic policies, including those affecting interest rates. A government committed to fiscal austerity might see lower interest rates, making mortgages cheaper, while expansionary fiscal policies could have the opposite effect.
Public Spending and Investment: Increased public investment in infrastructure can boost property values in certain areas, while austerity measures might have a cooling effect.

Investor Confidence:
Foreign Investment: Political stability and the government’s stance on foreign investment can influence overseas buyers. Policies promoting a favourable investment climate can attract foreign capital into the property market.
Market Sentiment: The overall confidence of investors, both domestic and international, in the UK economy plays a crucial role. A stable government with a clear majority might boost confidence, while a hung parliament or a coalition government could lead to prolonged uncertainty.

Regional Impacts:
Local Policies: Some election outcomes might result in devolution of more powers to local governments, allowing for more tailored housing policies in regions like Scotland, Wales, and Northern Ireland. This can create divergent property market trends across the UK.

In summary, a general election introduces a range of potential changes that can affect the UK property market in multiple ways, from short-term uncertainty to long-term policy shifts. Buyers, sellers, and investors typically watch election developments closely to gauge their likely impact on the market.