At Homesite we like to keep you informed about everything that’s happening in the property market. Sometime towards the end of this year, there will be a general election and, no doubt, many of you will be wondering what effect this will have on house prices. We thought it would therefore be a good time to take a look at what happened during the last 8 elections, starting in April 1992, the year John Major won it for the Conservatives.
9th April 1992 – John Major (Conservatives). Avge. house price at the time – £55,166, which then rose 12% during their term in office.
In 1992 both the economy and property were in the middle of a major slump. In the run-up to the election, prices continued on their same downward path but then plummeted to a nadir of -7% in the following December before making a slow recovery over the next couple of years.
1st May 1997 – Tony Blair (Labour). Avge. price – £61,946. Then rose by 56%.
By May 1997, when Tony Blair was first elected as Prime Minister, house sales were already picking up. Prices had risen by 2.1% during the preceding 12 months. Just before the election, they slowed slightly, before taking off again, rising by as much as 5.1% in July and continuing on their upward trajectory until the next election.
7th June 2001 – Tony Blair (Labour). Avge. price – £96,499. Then rose by 61%.
Fast-forward to June 2001 – Blair was re-elected, sales were going strong and house prices were rising at an annual rate of 10%. In the months before the election, prices steadied before climbing immediately afterwards and then continued rising for several years, hitting their peak in the autumn of 2004.
5th May 2005 – Tony Blair/Gordon Brown (Labour) Avge. price – £155,533. Then rose by 10%.
Four years later, in May 2005, at the time of Blair’s third successive victory, prices were decelerating. Instead of the 20% plus rises seen in 2004, they had come down to 8.1%. In the months before and after the election, prices continued almost completely unaffected and transaction volumes actually increased. At the time people were going to the polls, the price of the average home had shot up to £155,533, an increase of over 61% since the previous election.
But then came the banking crisis of 2007/08, which provoked one of the deepest economic recessions in living memory. Bank lending dried up, the mortgage tap was turned off and, despite the base rate being slashed, the property market was thrust into five years of stagnation. The accompanying slump in house prices meant that by 2008, the cost of the average home had fallen by 16%.
6th May 2010 – David Cameron and Nick Clegg (Coalition). Avge. price – £170,846. Then rose by 14%.
By the time the next election came around, sales were moribund and prices had fallen from a pre-crash high of £190,032 (Sept 2007) to £170,846. That was, though, still 8.1% up from the previous year. In the two months prior to the election prices and sales volumes fell further before rising on the news that a coalition had been formed. It was, however, something of a false dawn, as sales were soon back in the doldrums.
It wasn’t until early 2013 that the government found a way of boosting the property market. The Funding for Lending Scheme injected billions of pounds of cheap taxpayers’ money into the banking system and most of it went on fresh mortgage lending.
7th May 2015 – David Cameron/Theresa May (Conservatives). Avge. price – £195,313. Then rose by 14%
The success of the Funding for Lending Scheme meant that by the 2015 election, house prices had reached £195,313. Growth tailed off slightly in the run-up to the election because, as in 2010, there was some uncertainty over the makeup of the next government. Once the result was known, the market picked up once again.
However, in June 2016, the UK voted to leave the EU, David Cameron resigned and Theresa May took over. After a brief pause for thought, house prices slowed rather than crashed, ending the year up 7.2% at £219,544.
8th June 2017 – Theresa May/Boris Johnson (Conservatives). Avge. price – £221,833. Then rose by 5%
Riding high in the polls and trying to push through her Brexit deal, Theresa May called an early election. As her polling worsened, house prices slowed sharply and then climbed immediately afterwards as her re-election gave some clarity of direction. However, the continuing fallout from the EU referendum and rising stamp duty costs meant any further rises were subdued, sales volumes plummeted and prices in London nose-dived.
Rows over the EU meant Theresa May didn’t last long, resigning as PM in May 2019 to be replaced by Boris Johnson. House prices had been sliding in the preceding months but then briefly returned to growth and just 7 months later there was yet another election.
12th December 2019 – Boris Johnson/Liz Truss/Rishi Sunak. Avge. price – £231,792
Long before the election was called, homeowners had been putting their plans on hold as they waited for the UK’s Brexit deal to be finalised. As a result, house prices were falling and sales volumes had dropped off the edge of a cliff. This process continued throughout the election period and then, with a deal finally signed at the end of January, there was the much-anticipated ‘Boris Bounce’. But then COVID struck and we went into the first lockdown. House prices, however, boosted by Stamp Duty holidays, just kept on rising, hitting a high of £288,901 in September 2022.
The final lockdown ended in July 2021, but the boom carried on, only coming to a halt in February 2022, with the outbreak of war in Ukraine. The war brought about the cost-of-living crisis, raging inflation and soaring mortgage costs. By June of 2023, Boris had gone and just 44 days later, Liz Truss was gone, too, to be replaced by Rishi Sunak.
As we head into the next election, those financial headwinds are finally starting to recede, but only very slowly. However, the electorate appears unwilling to forgive the Tories for either the political or financial turmoil of the last few years and most would now put their money on a Labour victory in the autumn.
Current Avge. price (Feb 20224) – £280,660, a rise of 21%
So what can we deduce from this quick trip through history?
It is quite clear that the market is far more affected by the prevailing economic conditions rather than elections. However, any uncertainty over the nature of an incoming government will produce brief distortions in the market, normally around 6 weeks beforehand, after which activity and prices swiftly return to where they were pre-election.
It is encouraging to note that, however well or badly they did, in the last 32 years, every single government oversaw rises in the value of our homes during their term of office, suggesting that prices rise in spite of politics and politicians. And, even though the Conservative Party has a reputation for boosting the housing market, Labour has a far better track record, which should give some comfort to any homeowners nervous about the arrival of Keir Starmer and Co.