How will the Election Impact the Basingstoke Property Market?

After the governments surprise announcement of a snap election of 8^th June 2017, a number of our customers have asked me how this is likely to impact the housing market.

It is fair to say that historically, a general election has usually signalled a decline in property sales, just before the election, only for this to return to normal figures shortly after the dust has settled. However, given that general elections since 1980 have nearly always fallen in May or June, looking at the seasonally adjusted figures since 2005, it would suggest this is nothing more than an annual trend in the housing market.

 

Source: HMRC

The main highlights from the graph above are:

·         The number of property sales drop from their peak of 150,000 per month at the end of 2007 (coinciding with the credit crunch/recession).

·         A peak in December 2010 coinciding with the end of the Stamp Duty Land Tax “holiday” when the lower tax threshold was temporarily raised to £175,000.

·         A similar peak in March 2016, which coincides with increases in stamp duty for additional homes.

·         A levelling out of monthly transactions to around 100,000 property sales per month currently.

If we look at the figures over a shorter time period of just 18 months, it highlights more clearly a few of the more recent trends with housing sales.

 

Source: HMRC

·         The dramatic impact on sales caused by the stamp duty changes in March 2016 and the subsequent dip in sales in April and May of that year.

·         The best time to sell a property is in the summer months, just before the start of the new school term in September.

·         The worst time to sell a property is from December to February. Similar annual trends can be seen in the first chart above going back to 2005.

 

What is most striking in these figures however, is the apparent flat line in sales over the past 18 months at 100,000 properties per month based on the seasonally adjusted figures.

 

This has lead to The Council of Mortgage Lenders (CML) describing the housing market as being in “Neutral Gear”.

 

Whilst we have seen a move from Buy-To-Let mortgages leading the market until March 2016, towards first time buyers, we are also likely to see heavy competition between mortgage lenders to win that business through offering lower rates. Most recently, Yorkshire Building Society has launched a rate of 0.89%, fixed for two years. However, many of these offers come with a health warning, as setup fees can be substantial.

 

Basingstoke

As mentioned before, the Basingstoke property market has faired very well over recent months. However, we are now starting to see price reductions at the higher end of the market, which is consistent with an earlier trend seen in London. 

Although there may be a slight slow down, courtesy of the election, the good news as that the relatively short notice of the election should minimise any impact.