The unexpected snap election is drawing closer. Many homeowners in Rotherham have contacted me asking what impact this vote will have on the local property market. The best way to tell the future is to look at the past.
In Rotherham, 12,963 homes are owned without a mortgage and 14,482 homes are owned by a mortgage. This is clearly an important issue to the people of Rotherham, as well as many other voters up and down the country.
What’s going to happen to the property market?
I have looked over the last five general elections and analysed in detail what happened to the property market on the lead up to and after each general election.
Some very interesting information has come to light.
Of the last five general elections (1997, 2001, 2005, 2010 and 2015), only the last two elections had results that were uncertain (2010’s election led to the coalition government and 2015’s vote resulted in an unexpected Tory majority).
Therefore, I decided to compare the number of houses sold and prices achieved in 1997, 2001 and 2005 (when Tony Blair’s New Labour seemed impossible to stop) with the uncertainty of 2010 and 2015.
How have General Elections impacted the number of houses sold in the last 20 years?
Below your can see the number of properties sold and the dates of the general elections:
It is clear, looking at the number of monthly transactions (the blue line), that there is a certain rhythm or seasonality to the housing market. This has never changed since 1995 (seasonality meaning the periodic fluctuations that occur regularly based on a season – i.e. you can see how the number of properties sold dips around Christmas, rises in spring and summer and drops again at the end of the year).
To remove that seasonality, I have introduced the red line.
The red line is a 12 month ‘moving average’ trend line which enables us to look at the ‘de-seasonalised’ housing transaction numbers, whilst the yellow arrows denote the times of the general elections. It is clear to see that after the 1997, 2001 and 2005 elections, there was significant uplift in number of households sold, whilst in 2010 and 2015, there was slight drop in house transactions (i.e. number of properties sold).
How have General Elections impacted the property price of houses in the last 20 years?
Next, I wanted to consider what happened to property prices. In the graph below, I have used that same 12-month average, housing transactions numbers (in red) and yellow arrows for the dates of the general elections but this time compared that to what happened to property values (pink line).
It is quite clear none of the general elections had any effect on the property values.
Also, the timescales between the calling of the election and the date itself also means that any property buyer’s indecisiveness and indecision before the election will have less of an impact on the market.
What about the rental market?
There are 5,416 private rented properties in Rotherham. What does this all mean for the landlords of these properties?
Well, as I have discussed in previous articles property value growth in Rotherham is expected to be more subdued in the coming few years for reasons other than the general election.
The growth of rents has taken a slight hit in the last few months as there has been a slight over supply of rental property in Rotherham, making it imperative that landlords in South Yorkshire are realistic with their market rents.
But, in the long term, as the younger generation still choose to rent rather than buy, the prospects are good. Investing in buy-to-let property still looks a good bet – even with the changes in taxation.
If you’d like any more advice about buying or selling a property around a General Election or if you have any further questions about the impact of the current political situation on the property market then please contact me. You can always catch me on Facebook or Twitter if you want the latest information!