United Kingdom general elections and the impact on house prices
Aha, Bismark and Higgins, David and Lee, Timothy (2022) United Kingdom general elections and the impact on house prices. International Journal of Housing Markets and Analysis. ISSN 1753-8270
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Abstract
Over the last two decades, many developed countries have experienced notable changes in house prices. This explanatory study considers if house price movements in the UK can be linked to the political cycle as governments realize 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 annual UK house prices increased by an average of 2.84%. While there is no evidence that house prices in the UK performed significantly differently under different political parties, we observed that house prices performed much better in the last year before an election, compared to the first year after an election. On average house prices increased by 5.3% per annum in the last year before an election compared to 1.3% per annum in the first year following an election. The study, thus, highlights significant variations in the performance of UK house prices around election times. It is imperative, therefore, that the political cycle is given adequate consideration when making residential property investment decisions.
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