"With an Election within touching distance, this is bound to have an impact on some consumers’ decisioning, particularly when it’s as important as buying and selling a home."
While I can’t be 100% confident about this, I’m as sure as I can be that we will have a General Election in 2024. I feel even more confident of that, following the Spring Budget.
Of course, Prime Minister Sunak, does have the option of waiting until the end of the year to call it, and the last date on which a GE could technically be held is 28th January next year.
One would presume that, if we are waiting that long, something has gone seriously wrong for the Conservative Government, and as the PM said earlier this year, his “working assumption” is that he expects to call a GE “in the second half of the year”.
That in itself is going to be a fairly unusual timescale to work to, because while the most recent election – 2019 – was held in December, pretty much all others for the last 30-plus years have taken place in late Spring/early Summer.
It makes for an interesting period leading up to the election, which according to George Osborne recently, has been pencilled in for mid-November. Although talk of this now taking place in June or July, or pick any month, has gathered pace too.
If it is to be November, then most of the year will have run its course and you can’t help wondering what this might mean for the UK housing market, particularly for those who would ordinarily be interested in buying or selling, but might feel they need to pause and hedge their bets before those all-important votes are cast?
This is especially pertinent in a period when the opinion polls – and I’m aware they are not always an exact predictor of GE results – are showing the strong likelihood of a change of Government. Might this change consumer behaviour between now and the election? Might they wish to wait and see what a Labour Government might do in the housing space before making large financial decisions?
The other wider point here is just how impactful are General Elections on the housing market, and in particular mortgage lending and housing transactions, typically?
We appear to have started 2024 at a pretty healthy level in terms of new business volumes, but should advisers be aware of any historical precedents during General Election years which might indicate a greater chance of activity slowing down in the lead up to a national vote? Might the early months of 2024 not be duplicated in the months leading up to an Election?
Housing transaction data from the Government – which covers April to April financial years rather than calendar years – reveals housing transactions were down overall in 2010-2011, compared to the previous non-General Election year.
That, however, was not the case in 2015-2016 which outperformed the year previously and indeed, the years after.
Transactions for 2017-18 were also better than the year before. By contrast 2019-2020 was down on the year before and were beaten by the year after. So it’s a mixed bag but does appear to show that a General Election year does not necessarily mean a drop in housing activity; indeed in both 2010 and 2017, activity was up.
Total residential loans to individuals (both regulated and non-regulated) according to the FCA were £146bn in 2010, down on both 2009 and superseded in 2011. 2015 lending was also outperformed a year later, as was the case in 2017. That said, 2019’s £276bn was a high watermark, although you would expect 2020 to be lower given the Covid and lockdown situation that marked much of that year.
There might be enough in that FCA data to suggest Election years can be marked by something of a small slowdown, but the significant problem we have, of course, is that every General Election – certainly after 2005 – has been during, what we might deem, tumultuous times, or just after major ground-shifting UK or World events.
We were still in the eye of post-Credit Crunch storm in 2010; we were post-Coalition Government and pre-Brexit vote in 2015; in 2017 we were in a minority Government Brexit vote maelstrom; while 2019 was an election all about ‘Getting Brexit Done’.
This year, we are a couple of years post-pandemic, two years post-‘Mini Budget’ and we’ve also had three Prime Ministers during the last Parliament. Plus, a turbulent economic period, marked by a cost-of-living crisis and the ongoing war in Ukraine.
And that’s an important point to make in all of this – the value of stability. While we might have been able to say with some certainty that Labour would be re-elected in both 2001 and 2005, I’m not sure we have been able to say the same thing in any General Election since, even in 2019 when the Conservatives secured their significant majority.
This year, according to the polls, it might look like a foregone conclusion but if that does play out, it will still herald a new party in power after 14 years, and there is clearly uncertainty in abundance here in terms of what path they might follow. Then again, as pointed out above, how much certainty and stability have we had over the last Parliament – I would contend very little at all.
As advisory firms however, it’s important to recognise these are shifting political sands, and clearly with an Election within touching distance, this is bound to have an impact on some consumers’ decisioning, particularly when it’s as important as buying and selling a home.
One first quarter mortgage market swallow is unlikely to make a summer when it comes to business activity, and we all need to be aware there could be a sense of a lack of stability and uncertainty from clients during the rest of the year.
A General Election only heightens this, however if we continue to see inflation fall, rates come down, further lender appetite and competition, we still have the makings of a market which comes with lots of opportunities, regardless of who is sitting on the Government benches this time next year.
