UK Political Cycle and the Effect on National House Prices: An Exploratory Study

Aha, B and Higgins, D M and Lee, T (2018) UK Political Cycle and the Effect on National House Prices: An Exploratory Study. In: European Real Estate Society 25th Annual Conference, 27-30 June 2018, Reading.

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Abstract

Over the last two decades, many developed countries have experienced notable changes in house prices. This exploratory study considers if house price movements in the UK can be linked to the political cycle as governments realise homeowners represent a large portion of the voter base and their voting decisions could be influenced by the magnitude and direction of house price changes. Specifically, the paper investigates
whether house prices behave differently before and after elections and under different political regimes. To examine this relationship, the study analyzed quarterly UK national house price data since 1960, along with data on the results of UK parliamentary elections during the same period. Over this period, real UK house prices increased by an average of 2.84% per annum. While there is no evidence that house prices in the UK
behave significantly differently under different political parties, it is evident that house prices perform much better in the last year before an election, compared to the first year after an election. Over the time period defined for this study, house prices increased by 5.3% per annum on the average in the last year before an election compared to 1.3% per annum in the first year following an election. As this research clearly identifies major variations in house price performance around election times, residential property investment decisions should take into consideration the political cycle.

Item Type: Conference or Workshop Item (Paper)
Subjects: K200 Building
K900 Others in Architecture, Building and Planning
L100 Economics
N300 Finance
Divisions: Faculty of Computing, Engineering and the Built Environment > School of Engineering and the Built Environment
Faculty of Computing, Engineering and the Built Environment
UoA Collections > REF2021 UoA13: Architecture, Built Environment and Planning
Depositing User: Timothy Lee
Date Deposited: 09 Aug 2018 10:52
Last Modified: 09 Aug 2018 10:52
URI: http://www.open-access.bcu.ac.uk/id/eprint/6226

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