In Grantham, of the 17,944
households, 4,945 homes are owned without a mortgage and 6,224 homes are owned by
a mortgage. Many homeowners have made contact me with asking what the General
Election will do the Grantham property market?
The best way to tell the future is to look at the past.
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 the 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 verses 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 - i.e. 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 3,375 private rented properties in Grantham? Well, as I have discussed
in previous articles (and just as relevant for homeowners as well) property value
growth in Grantham will be more subdued in the coming few years for reasons
other than the General Election. The growth of rents has taken a slight hit in
the last few months as there has been a slight over supply of rental property
in Grantham, making it imperative that Grantham landlords are realistic with their
market rents.. 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 Grantham property market – then why not visit the Grantham Property Market
Blog for more information?
