Election jitters for property market

A good turnout in the General Election, coupled with a Tory defeat, could devastate the property market, says one of the UK’s largest agents.

Bookies are currently offering odds of 1/5 on a turnout higher than the last election, but odds of only 3/1 of a lower turnout.

Research by Your Move covering elections going back to 1979, shows that high turnouts are followed by a slump in transactions, whereas low turnouts stimulate the market.

For instance, in the 1987 election, when turnout was a high 75.3%, transactions fell 3.4% in the following three months compared with the three months before.

In 1992 when there was an even bigger 77.7% turnout, transactions fell 2.4%.

But in the 2005 election when there was a turnout of only 61.4%, a 5% increase in transactions followed.

David Newnes, managing director of Your Move, said: “If the bookies are right and we see a high turnout, we will see a large dip in housing market activity. It will put a huge dampener on the market.”

Your Move also found that when the Conservatives do well at the polls, increased activity in the housing market follows.

In 1979 the Conservative Party received 13,697,923 votes, compared with 11,457,079 in October 1974. In the three months following the 1979 election, there was an 8.6% surge in activity.

In 1997, when the Conservative vote dwindled to 9,600,943 votes and Labour got in, transactions shrank 2% in the following three months.

Newnes said: “The increasing uncertainty of a Conservative victory is potentially very bad news for the housing market. But if the Tories do well, the bounce back should be pronounced.

“With the abolition of HIPs on the agenda, as well as the promise to increase the Stamp Duty threshold to £250,000, many potential buyers and sellers are waiting to see if the Tories get into power.”