The best way to tell the future is to look at the past.
So I have looked over the last five general elections and
analysed in detail what happened to the property market on the lead up to and
after each general election. Some very interesting information has come to
light.
Of the last five general elections (1997, 2001, 2005,
2010 and 2015), the two elections that weren’t certain were the last two (2010
with the collation and 2015 with unexpected Tory majority). Therefore, I wanted
to compare what happened in 1997, 2001 and 2005 when Tony Blair was guaranteed
to be elected/re-elected versus the last knife edge uncertain votes of 2010 and
2015… in terms of the number of houses sold and the prices achieved.
Look at the first graph below comparing the number of
properties sold and the dates of the general elections….
It is clear, looking at the number of monthly transactions
(the blue line), there is a certain rhythm or seasonality to the housing
market. That rhythm/seasonality has never changed since 1995 (seasonality
meaning the periodic fluctuations that occur regularly based on a season
– ie you can see how the number of properties sold dips
around Christmas, rises in Spring and Summer and drops again at the end of the
year).
To remove that seasonality, I have introduced the red
line. The red line is a 12 month ‘moving average’ trend line which enables us
to look at the ‘de-seasonalised’ housing transaction numbers, whilst the yellow
arrows denote the times of the general elections. It is clear to see that after
the 1997, 2001 and 2005 elections, there was significant uplift in number of
households sold, whilst in 2010 and 2015, there was slight drop in house
transactions (ie number of properties sold).
Next, I wanted to consider what happened to property
prices. In the graph below, I have used that same 12-month average housing
transactions numbers (in red) and yellow arrows for the dates of the general
elections but this time compared that to what happened to property values (pink
line).
It is quite clear none of the general elections had any
effect on the property values. Also, the timescales between the calling
of the election and the date itself also means that any property buyer’s
indecisiveness and indecision before the election will have less of an impact
on the market.
So finally, what does this mean for the landlords of the
private rented properties in Penicuik? Well, as I have discussed in previous
articles (and just as relevant for homeowners as well), property value growth
in Penicuik will be more subdued in the coming few years for reasons other than
the general election. But, in the long term, as the younger generation still
choose to rent rather than buy … the prospects, even with the changes in
taxation, mean investing in buy-to-let still looks a good bet. If you want to
read more about the Penicuik property market – then why not visit thepenicuikpropertyblog.co.uk
for more information?
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