The recent announcement by the British Prime Minister regarding the next general election set to take place in early July 2024 has inevitably stirred discussions about its potential impact on the Southampton property market. Historically, general elections are periods of heightened uncertainty, often leading to speculation about their effects on house prices and transaction levels. However, examining past trends reveals a relatively stable market, with only minor fluctuations in transaction volumes.
House Prices To Remain Steady
Data from previous election cycles indicates that UK house prices, as measured by the Land Registry figures, have shown resilience in the face of the last five general elections. In fact, the trend has generally been one of stability or even growth. However, the Land Registry data, by its very definition, is six months out of date, as they measure sales that were agreed upon six months previously.
However, new data by Denton House Ltd shows that measuring the £ per square foot of the house sold in a specific month matches the Land Registry rate five or six months later (with a 92% correlation). This means that we can accurately measure the effects of a general election both prior, during and after to ascertain its impact on the property market to house prices
The statistics of £/sq.ft for Jan 2019 to Dec 2020, covering a year on either side of the last general election, show some interesting information on the graph. During the autumn and winter of 2019, the average pound per square foot figure drifted downwards from £275 per square foot to £270 per square foot (meaning house prices were dropping). However, looking at the graph, you will see that post-election house prices went up (even before the pandemic hit)
This pattern suggests that the Southampton property market is robust enough to withstand the uncertainty typically associated with general elections.
Temporary Dip in Property Transactions Before the Election
While house prices remain stable, the number of property transactions (i.e., home selling) usually experiences a temporary dip in the weeks leading up to a general election. This phenomenon is primarily driven by potential buyers adopting a ‘wait and see’ approach, delaying decisions until after the election results are clear. However, this could be a time to strike and grab a bargain because a surge always follows this dip in transactions as pent-up demand is released once the political landscape stabilises.
Post-Election Market Catch-Up
Post-election periods typically see a catch-up in the number of transactions. Postponed transactions due to election-related uncertainties usually proceed shortly after the election, leading to a rebound in market activity. For example, there were 218k property transactions (house sales) in the three months before the last 2019 election and £286k in the three months afterwards. This pattern has been consistent across multiple election cycles, indicating that while transaction volumes may fluctuate temporarily, the overall market equilibrium is maintained.
Final Thoughts
In conclusion, the general election’s impact on the Southampton property market is minimal regarding house prices, which have shown a tendency to remain steady or even increase during election periods. The primary effect is a short-term dip in the number of transactions promptly rectified post-election. This resilience underscores the British and Southampton property market’s robustness, reassuring buyers and sellers that political events, while temporarily influential, do not drastically alter long-term market dynamics.
Thus, Southampton homeowners, landlords and buyers can confidently approach the upcoming election, knowing that any temporary disruptions will likely be swiftly relieved. Should you have any questions about the Southampton property market, feel free to drop us a message or pick up the phone on +44 23 8001 8222.
