There are some important factors to consider here. In all three election years since 2005, the market was in a very different place. In 2005, volumes were high, at an average of over 100K per month, whereas during post-recession 2010, volumes averaged around 65K and 2015 saw volumes running around the 80K mark. In 05 the market was cooling as we approached the election period and conversely the market was moving ahead in 2010, as it was in 2015. And the result of the election was different on all three occasions too. Labour won under Tony Blair in 2005, we had a coalition government in 2010 and David Cameron’s Conservative government was elected 5 years later.
Despite different volumes, market conditions and election results, the market behaved in the same way. For the two months prior to polling day, volumes were steady at the levels they were when the hustings began, then, immediately after the election itself, volumes climbed steeply, even though a different colour government was elected on each occasion.
It’s very important to remember that these figures refer to legal completions, so the sales will have been agreed 6 to 8 weeks before.
So, far from the election denting transaction numbers as the Daily Mail’s “experts” would have us believe, the number of sales agreed increase substantially during the run up to the poll. The data suggest that consumers conclude that a new government might mess with key factors influencing their decision to buy; Stamp Duty, interest rates or, for buyers of new homes, Help To Buy, so they think ’buy now before the game changes’.
I believe these data provide the clearest possible guide to the way the market will react in the month before this snap election and two months afterwards, although the uptick might be slightly weighted towards the end of the period because of the short notice given to voters. Other than that, I see no reason why the effect of this election should be any different from the last three, Brexit or no Brexit.
On the chart below I have plotted what I believe the effect will be this year. This election is a month later than the previous three, but I am confident the pattern will still be replicated. Although there was a dramatic and largely unexpected upturn in transactions in March, I still firmly believe that overall transaction volumes will be lower in 2017 than in 2016, so the election effect will be slightly less extreme, but I am confident it will happen. Those thinking of buying over the next few months will want the certainty of a done deal and fixed interest rates.