Will the General Election in July Affect Hertfordshire House Prices?
Yesterday's announcement by the British Prime Minister regarding the next general election set to take place on 4th July 2024
Yesterday, the British Prime Minister announced that the next general election will take place on 4th July 2024. This has sparked discussions about its potential impact on the property market in Hertfordshire. General elections typically bring about heightened uncertainty and speculation about their effects on house prices and transaction levels. However, historical trends indicate that the market has remained relatively stable, with only minor fluctuations in transaction volumes. Additionally, with only a short period before election day, the usual impact of indecision should be greatly reduced.
House Prices Expected to Stay Stable
Data from previous election cycles indicates that UK house prices, as measured by the Land Registry figures, have shown resilience during the last five general elections. The trend has generally been one of stability or even growth. However, the Land Registry data is typically six months out of date, as it measures sales agreed upon six months earlier.
New data compiled by Twenty EA shows that measuring the price per square foot of houses sold in a specific month closely aligns with the Land Registry rate five or six months later, with a 92% correlation. This allows for an accurate assessment of the impact of a general election on house prices before, during, and after the event.
The statistics for £/sq.ft from January 2019 to December 2020, covering a year before and after the last general election, reveal interesting trends. In the autumn and winter of 2019, the average price per square foot decreased slightly from £275 to £270, indicating a minor drop in house prices. However, after the election, house prices saw an increase, even before the impact of the pandemic.
This pattern suggests that the Hertfordshire property market, is robust enough to withstand the uncertainties typically associated with general elections.
Temporary Dip in Property Transactions Before the Election?
During the weeks leading up to a general election, the number of property transactions typically dips temporarily while house prices tend to remain stable. Potential buyers tend to adopt a 'wait and see' approach, delaying their decisions until after the election results are clear. However, as mentioned above, the period prior to the election date is minimal. Therefore, any effect is thought to be negligible in this election.
Post-Election Market Rebound
After an election, there is typically an increase in the number of transactions. Transactions that were delayed due to uncertainties related to the election usually proceed shortly after the election, leading to a higher level of market activity. For instance, there were 218,000 property transactions (house sales) in the three months before the last 2019 election and 286,000 in the three months afterward. 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
The impact of the general election on the Hertfordshire property market, especially in Hertfordshire, seems to be minimal in terms of house prices. House prices tend to remain stable or even increase during election periods. Putterills believes that the Prime Minister’s announcement of a summer general election is good news. With inflation nearing the Bank of England’s target and a likely drop in interest rates, this news will be welcomed by buyers, sellers, and estate agents. These groups have been dealing with a fragile market in recent months and have been waiting for positive signs, which will come with the certainty of an election result