With the Prime Minister calling an Election for May 6th 2010, this is a good time to consider the effect the campaign will have on the UK property market - both in terms of activity and prices. Could the Election reduce demand for conveyancing?
Any market is driven by sentiment as much as technical supply and demand. And sentiment hates uncertainty. . and this looks like a particularly uncertain Election campaign - with most pundits forecasting a hung Parliament (even if the bookies are still seemingly confident that the Conservatives will win!)
We have to go back to the somewhat unexpected Major win in 1992 before any election looked anywhere near as close - now a full generation ago. Property prices declined during 1992 (there was a minor recession going on at the time) - but interestingly rose to a high point in Q3 after the Election before falling back again. A short-lived Tory win bounce? The election was at the start of Q2 but there is a delay action from the time taken between Offer and Completion. It's possible that, if results point to a clear outcome - particularly a Tory win - prices will drift upwards. Conversely, if they show a Hung Parliament - or maybe a Labour win they will stay level or drop.
Table: Property Prices during 1992
Q1 £61, 124
Q2 £61, 047
Q3 £63, 712
Q4 £59, 230
(source: Communities & Local Govt. )
Property transaction volumes during the 1992 campaign seemed unaffected by the Election - so very possibly they will stay at the current, somewhat flat, levels. They were at a relatively low level at that point and probably had little down-side. Maybe the same is true now? In conclusion - Estate Agents still in business can sleep easy!
Table: Property Transaction volumes 1992
(source Communities & Local Govt. )
The Party Promises?
And what of the various promises of the Conservatives and Labour? The main relevant pre-election pledges that directly affect house prices were the twin Tory promises on Stamp Duty (now already implemented by Labour) and to abolish the Home Information Pack. The latter may not have the impact that they imagined as prices of HIPs have fallen.
In conclusion, at these early stages we see the polls as being the key. The sooner they show a clear winner, the stronger sentiment will be and prices and mortgage offers will stay firm. Uncertainty will operate in the opposite direction with people sitting on the fence unwilling to make "a mistake". Our tip? Look at the bookies - they rarely get it wrong! See General Election Odds.