August, 2024
The short answer to whether the election result will boost the property market is simple. Yes.
That’s because the new Labour government has made housing a key policy in its plans for the country now it’s come to power.
In her first speech just days after the election, new chancellor Rachel Reeves revealed that Labour was setting a five-year target to build 1.5 million homes. Widespread planning reform, including the review of greenbelt boundaries, will enable the expansion.
The focus on getting Britain building again shows renewed confidence in the property market and a determination to get people buying.
Increased confidence in buying will also be enabled by falling mortgage rates which in turn comes from a recovering economy. Alongside the government’s housebuilding plans, economic stability is another cornerstone of Labour’s policy with a promise of stringent spending rules to enable that.
Labour will be looking to maintain the momentum of the Conservatives who, although they may have lost the general election, did finally hit their 2% target for inflation last month. As a result, interest rate cuts are widely expected at the next base rate review by the Bank of England on August 1. Mortgage lenders have already begun cutting rates in expectation of such changes during the last couple of weeks.
Falling mortgage rates will increase the pool of buyers interested in property for sale, as well as giving greater confidence that now is the right time to buy. That’s good news for sellers, but will also prompt additional sellers to come to market so realistic pricing and persuasive marketing will be more important than ever if you want to win the sale.
The new government has also pledged to help first-time buyers with its mortgage guarantee scheme, Freedom to Buy. It has yet to reveal more details of what this will comprise. However, the additional support for first-time buyers struggling to get the deposit together for their first home will be welcomed. There is already a similar scheme in operation which is currently due to run until June 2025. However, Labour has committed to making its scheme permanent.
Another factor that could lead to a further boost for the property market comes from the prospect of the market stability that will inevitably come now that the election is done and dusted. The government can now concentrate on its job since the uncertainty surrounding when a general election would be called and the subsequent distractions of campaigning, are over.
Similarly, industry will welcome the greater clarity of where the future is heading. These factors, accompanied by economic stability, should help to drive confidence in all sectors of the market, which, the government hops, should ultimately lead to higher growth.
