What to Expect for Property Investment in an Election Year

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Will the Housing Market Experience a Knock-On Effect in an Election Year?

2024 will likely be a year for a general election, as the nation must vote before January 28, 2025. Holding the election in autumn seems probable, as scheduling it during Christmas is highly undesirable.

Many believe people delay moving homes before a general election due to uncertainty about the economy and its impact on finances.

However, recent research by Hamptons reveals a different reality. For instance, their data shows that Governments strategically time elections when the economy, including the housing market, is getting stronger.

Hamptons’ analysis of the last seven general elections shows a 2% increase in home sales in England and Wales during an election year compared to the previous year. This increase mainly reflects economic improvement.

Find Out More: What is a buy-to-let property likely to earn in 2024? To better inform your buy-to-let strategy, make sure you know the cost of letting a property.

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Are Buyers & Sellers Wary in the Current Election Year?

There’s little evidence that home buying and selling slows before a general election. The number of sales agreed in the three months preceding the vote typically increases by 7% compared to the previous year, with a higher proportion of yearly sales occurring in this period. This trend isn’t driven by anticipation of political change, as post-election sales also see a rise of about 6%.

However, this pre-election surge isn’t observed in the prime property market (homes priced at £2m and above). Sales in this bracket decrease by 5-6% in the three months before an election but tend to bounce back by 12% afterwards.

Yet, for most markets, general elections don’t significantly affect buying or selling decisions. Election outcomes generally align with pre-voting polls, fostering optimism among households. Although some buyers may hold off, they’re outweighed by new entrants attracted by a strengthening economy, causing a slight decrease in rental market activity.

Looking ahead, the upcoming election is expected to follow similar patterns. Governments tend to delay elections to coincide with positive economic trends, such as a growing economy and lower interest rates. Cheaper mortgage rates and a drop in interest rates are anticipated, countering any concerns about potential political changes.

[Figures in this section were taken from Hamptons.]

Discover More: Stay informed about property investment with some handy articles. Read our guide on the meaning of freehold tenure, or check out our page on new-build properties in Liverpool.

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What Is the Latest in the UK Regarding Sentiment Towards Housing Policies?

Home Sale Pack recently conducted a survey revealing that most current buyers are postponing their home search until they have clarity on political intentions regarding the housing market before the general election.

According to the survey, 82% of buyers were waiting for Jeremy Hunt’s Spring Budget statement before deciding to buy a new home.

Buyers anticipated homebuying incentives in the Budget, with 52% hoping for policies such as 99% mortgages or stamp duty relief to support homebuyers.

Despite the absence of such incentives in the Budget, 78% of buyers still intend to proceed with their purchase plans.

Only 14% are prolonging their decision due to the Budget, and merely 8% have abandoned their homebuying aspirations because of the lack of incentives.

What does this mean when buying investment properties?

Increased buyers indicate a healthier market with lower mortgage rates and reduced inflation at 3.4% in March. Property investors may encounter heightened competition, especially in property chains. As such, considering alternative strategies like off-plan investment could be wise. This involves purchasing from a developer before construction, often through a property investment firm. Investors may secure discounts and benefit from quicker capital appreciation as properties usually rise in value upon completion.

For more property investment guidance, see some of our buy-to-let area guides, including:

Author

Dale Barham

Dale is a property content writer at RWinvest. Keeping a close eye on the UK property market, Dale helps our readers stay informed and up to date on the latest market news and statistics.