Elections in the UK are not due until the end of January 2025, but it is almost guaranteed that the general election will be scheduled in 2024. Pulling in voters to the polling station during the Christmas and New Year holidays can be quite a challenge, and that’s why an autumn election appears very likely. The outcome of the elections can be influenced by various factors and issues faced by the UK electorate. Still, according to experts, housing is one of the key factors most likely to affect the general elections.
There has been an increasing emphasis on the impact of the housing market on the general elections over the past few months, particularly when it was observed that certain segments of buyers and sellers were adopting a "wait-and-watch stance. This discussion has gained momentum again in recent weeks. Amidst the cost-of-living crisis, housing is poised to become a major issue in the upcoming election, more so than in recent years. Each political party is keen to showcase its capability to control inflation, directly impacting the financial situations of homeowners and landlords. The public feels that manifestos must address the concerns of private renters who are a demographic increasingly influential in securing potential seats that could swing either way.
Experts believe the postponement of the Renters Reform Bill's second reading, reportedly because of interests within the Conservative whip's office, may not garner favour with younger or less affluent voters. However, it could appeal to landlords, as could the potential abandonment of new energy efficiency requirements, which Prime Minister Sunak is considering. They may cost private landlords an average of 9,260 per property. Escalating mortgage rates have sidelined many first-time buyers who lack parental financial support. Despite Conservative initiatives like First Homes and 95 per cent mortgage loan guarantees, they struggle to counterbalance higher interest rates, and there appears to be no successor to the Help to buy scheme.
Critics have alleged that the Help to buy scheme artificially inflated prices for new-build houses. Any policy aimed at stimulating demand is expected to face scrutiny for its potential to distort the housing market. Traditionally, the industry's instinct has been to expect a Labour victory and wish for a Conservative one. This sentiment has historically been rooted in concerns about high taxation. However, it must be noted that Conservative governments have significantly altered that perception over the past 13 years.
It is now harder to argue that the Labour Party poses a more significant fiscal threat. This stance can be attributed to the increased stamp duty and surcharges, multiple tax adjustments affecting the private rental sector, aggravated Capital Gains Tax obligations, and the somewhat veiled Inheritance Tax. Here is a closer look at how the housing market has moved in relation to general election results over many past elections.
Labour Minister, Tony Blair’s tenure was the era of the most substantial housing market growth, witnessing an average annual price increase of nine per cent. From June 2001 to May 2005, under Tony Blair's leadership, house prices surged by nearly 48 each day. During his predecessor, John Major’s Conservative government, which came into power during the global recession in 1990, house prices increased by just three a day.
Margaret Thatcher's government was the most transformative post-war administration for housing policies. She introduced the Right to Buy, opened up Buy to let, shifted social housing to the third most popular tenure, and strongly advocated home ownership. However, regarding the percentage change in house prices, Thatcher's 11-year period, despite significant capital appreciation, is way behind Tony Blair's 10-year tenure from 1997 to 2007.
Analysing UK national house price data since 1960 and parliamentary election results shows that, on average, real annual UK house prices increased by 2.84 per cent. While there is little evidence linking house prices to specific political parties, the research indicates that the housing market tends to respond positively to decisive leadership, as seen during the Thatcher and Blair eras. In addition, there seems to be a temporary boost in the housing market in the year preceding an election. The analysis offers valuable insights as we approach 2024 and the final months before the next poll.
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