What does the snap election mean for the housing market?
Theresa May has announced that she will seek a general election on 8th June 2017. The prime minister needs the support of two thirds of MPs, but with a positive reaction from opposition leader Jeremy Corbyn it looks likely that the election will go ahead as planned, in a little over seven weeks’ time.
Analysis of the nine general elections between 1979 to 2014 shows that in normal circumstances there tends to be a slight slowdown in activity in the run up to the election date, followed by a bounce back post-election. There is little impact, if any, on price growth. Normally, an election is announced much further in advance, giving the market at least six months to consider political uncertainty.
The short notice given for this general election means that analysis of previous ones isn’t as comparable. The average home sold in 2017 so far has taken 21 weeks to sell (five months), three times longer than the 7 weeks it took before the last general election. Given the timings it’s likely there will be much less of an impact on activity than in the run up to other elections.
Some people may adopt a wait and see approach, which could slow down completions a little in May, but given that property won’t be the focus of the election this should be less than the last election. In the three months running up to the 2014 general election housing completions fell 5% year on year, recovering afterwards.
On the upside a decisive victory by the Conservatives (expected by most, but not certain) might mean smoother Brexit negotiations and higher consumer confidence, boosting housing market activity in the second half of the year.
Our view is that the short timescale between the announcement and the actual election date means there isn’t enough time for political uncertainty to have an immediate impact on the housing market.