It could be swings and roundabouts for property investors if there is a good turnout in the coming election as history shows that this tends to cool the housing market according to estate agents Your Move.
The company has analysed the number of property transactions completed during periods containing a general election, going back from the present day to 1979. They found that when voter turnout increases, the property market slows down.
For instance, in the 1987 election, when turnout was a healthy 75.3 percent, transactions fell 3.4 percent in the three months of the election, compared the three months before. And in 1992 when there was an even bigger 77.7 percent turnout, transactions fell 2.4 percent. But in the 2005 election where there was a turnout of only 61.4 percent, there was a 5 percent increase in the number of transactions.
Bookies expect 2010’s turnout to exceed the poor participation of 2005 – offering odds of 1/5 on election turnout coming in higher than 2005’s turnout of 61.4 percent. But the odds on turnout coming below 2005 levels are 3/1.
David Newnes, MD at Your Move, said: “Important general elections with massive turnouts tend to mean a decline in housing transactions. The more seriously the electorate takes an election the larger the scale of the disruption to the property market with tens of thousands of potential homebuyers or sellers distracted by the political process or waiting until it is over before entering the market. If the bookies are right and we see a high turnout in May, we will see a large dip in housing market activity. It will put a huge dampener on the market.”
Your Move also analysed the number of votes both the main parties received and found that when the Conservatives do well at the polls, increased activity in the housing market follows.
For instance, in 1979 the Conservative party received 13,697,923 votes, compared to 11,457,079 in October 1974. And in the three months following the election, there was an 8.6 percent surge in activity.
But in 1997, the Conservative vote dwindled from 14,093,007 (in 1992) to 9,600,943 votes. Housing transactions shrank 2 percent in the following three months.
Newnes continued: “Even if there’s a huge turnout and the number of property transactions falls as a result, it’s not all bad news for the housing market. If the Conservative party increases its vote, the housing market should heat up in the three months following the election.
“The number of seats and the eventual winner isn’t important – that’s all down to the lottery of first past the post voting – but the number of votes the Tories receive is all crucial.
“The increasing uncertainty of a Conservative victory is therefore potentially very bad news for the housing market. With a high turnout and fewer Tory votes, the market is more likely to cool. But if the Tories do He concluded that with the abolition of HIPs on the agenda, as well as the promise to increase the stamp duty threshold to £250,000, many potential property investors and sellers are waiting to see if the Tories get into power.
