More than half of the world’s population go to the polls in national elections this year. How does political change affect real estate markets?
A view of the Kennedy Center from the Residences at Ritz Carlton Georgetown in Washington, D.C. Photo: TTR Sotheby’s International Realty
This year marks an unprecedented wave of national elections across the globe. According to Reuters and The Economist, about half of the world’s voting-age population—over four billion people spanning nearly 80 countries that collectively account for more than 60% of global GDP—are eligible to cast their ballots in what Time magazine has dubbed “the ultimate election year.”
The most closely watched election is in the U.S., the world’s largest economy and third-largest nation by population, which will elect its next president in November 2024. The Democratic and Republican party platforms’ approaches to real estate are starkly different, from tax credits and down-payment assistance to low-regulation policies.
“The U.S. 2024 presidential election represents a critical moment for investors and financial analysts around the world—with the potential to have an impact on several areas, from economic policies to specific markets, the outcome could shape the global economic future,” says Renata Victorino, director, Bossa Nova Sotheby’s International Realty in São Paulo, Brazil. Victorino and her colleagues in South America are keeping a keen eye on what is happening in the U.S., even as municipal elections take place in Brazil in October to decide the leaders in more than 5,000 cities and towns across the country. Meanwhile, in other areas of the world, India—the largest nation by population—held its massive six-week general election process between April and June 2024, resulting in a coalition government led by prime minister Narendra Modi. Voting for the parliament of the 27-member European Union also took place in June.
This home in Austin, Texas, sits on the coveted location of Lake Austin. Photo: Kuper Sotheby’s International Realty
“Historically, the housing market tends to experience a slowdown in activity during presidential election years,” according to a report issued by the Nationwide Mortgage Bankers in March 2024. “This trend is particularly noticeable in the months leading up to the election as individuals prioritize political developments over real estate decisions.”
“Every election year the market softens,” says Claire Reynolds, managing partner, United Kingdom Sotheby’s International Realty in London, who has been involved in luxury property sales for two decades. “Uncertainty can create a wait-and-watch attitude, resulting in a market with temporarily subdued growth.”
Christie-Anne Weiss, global advisor, TTR Sotheby’s International Realty, Washington, D.C., who has more than 40 years’ experience in navigating the market during presidential elections, agrees. “From my experience, what we see again and again is that our market gets quieter around October,” the month before Election Day, she says. “Once the election is over and we know who the president is, business will resume as normal. It is buyer psychology; people do not make major investment decisions when there is imminent uncertainty.”
A stunning 150-year-old home in North Goa, India, where there were elections in spring 2024. Photo: India Sotheby’s International Realty
This effect spans the world. Pre-election uncertainty “slows down housing sales, specifically in metro markets, and impacts stock market activity, especially if a coalition government looks like it’s coming into power,” says Ashwin Chadha, chief executive officer, India Sotheby’s International Realty.
A sense of political stability, on the other hand, can have an unsurprisingly positive effect. Since India’s incumbent Bharatiya Janata Party (BJP) has held onto power in this year’s elections, the real estate market is likely to benefit. “The current government has reiterated its intentions for high spending, drawing in investments to boost the manufacturing sector,” adds Chadha. “Both infrastructure spending and manufacturing augur positively for the property market, including luxury real estate.”
In the U.K., meanwhile, the Conservative and Labour parties went head-to-head in a general election on July 4, with the Labour party winning by a clear majority. “The recent elections offer an opportunity for change. Against the backdrop of an optimistic interest rates outlook, housing plays a big part of the new government’s manifesto,” says Reynolds. “Only 18% of buyers [in central London] are purchasing their main home, 54% are purchasing a second home, and the other 28% are buying for investment,” Reynolds adds, citing statistics gathered by her firm. “International investment is hugely vital for the prime central London market, with the three most dominant groups of buyers being from the U.S., the Middle East, and China.”
This 11-bedroom house in central London offers spaciousness that is rarely found in the city. Elections in the U.K. took place in July 2024. Photo: United Kingdom Sotheby’s International Realty
While real estate agents are watching their own local elections closely, the property market is highly interconnected globally, so they have an eye on other elections as well, and the U.S. election looms the largest. Chadha recognizes concerns from abroad. “There are always risks,” he says. Internationally, a slowdown in the U.S. could have “a cascading effect on foreign investment.” But Victorino points out that “investment in the real estate market is one of the most stable, and the easiest to recover, even in unstable scenarios.”
“An uncertain market can present good opportunities for those with an appetite for higher-risk investments, or those who take a longer-term view,” says Reynolds. “For those taking a five-year or longer view, we’re forecasting good growth.”
