Will the general election impact house prices?

Nationwide announced that UK house prices saw a modest bounce back in May

Nationwide research showed that the upcoming general election is unlikely to hugely affect house prices (PA Wire)

The property market is showing tentative signs of a recovery after a difficult year where consumer confidence has been fragile due to wider problems in the economy.

Nationwide announced at the end of May that UK house prices had seen a modest bounce back after two months of falls and said the market was showing some “resilience”.

Separately, HMRC data showed a fourth consecutive monthly rise in house sales in April, rising five per cent to 90,430.

It comes after slight increases in mortgage rates since the start of the year slowed the housing market through March and April.

With a general election called for July 4, The Independent has looked at what impact the upcoming weeks of campaigning could have on the property market.

Alongside its latest house price index, Nationwide researchers analysed house price data around recent general elections and the EU referendum to see the impact on house prices or trends.

Robery Gardner, chief economist at the building society, said that elections don’t cause “volatility” in prices or generally change house price trends.

House price increases and decreases around previous general elections (Nationwide)

He said: “On the whole, prevailing trends have been maintained just before, during and after UK general elections. Broader economic trends appear to dominate any immediate election-related impacts.

Nationwide also explored if general elections had any impact on mortgage approvals, but also saw little impact.

He added: “It appears that housing market trends have not traditionally been impacted around the time of general elections. Rightly or wrongly, for most homebuyers, elections are not foremost in their minds while buying or selling property.”

However, research from Compare my Move said that house prices tend to rise in the 12 months immediately after a general election, by an average of 4.6 per cent.

Mortgage approvals around previous general elections (Nationwide)

The house comparison website said its research showed that one of the biggest factors of an election regarding house prices since 2005 was if there was a hung parliament or a party had a winning majority.

When a party wins by a majority house prices rise on average 6.9 per cent more than if the election ends on a hung parliament, the company’s research showed.

Dave Sayce, managing director and founder at the firm, said: “Stability is crucial to a beneficial property market, and a hung parliament will affect the stability to an extent.

“However, this doesn’t necessarily mean that house prices will fall as they did after the 2010 General Election, they could just rise more gradually than if we had a majority, as we saw in 2017.”

Director of My Home Move Conveyancing, Alistair Singer, agreed that election activity was unlikely to have an impact on the slowly growing momentum in the housing market.

He said: “Indeed, depending on the outcome, we often get a post-election bounce so we expect the market to strengthen further as the year progresses.”