Following the announcement that the next general election has been brought forward to July 4th, attentions have turned to the question of how – if at all – this decision might impact the UK property market.
Currently, the general consensus is that the likely impact will not be significant enough to garner concern, nor impede the ‘progress’ that the market has made so far this year, in terms of bouncing back from last year’s challenges.
In part, this vote of confidence owes to the fact that both the political parties in the running, appear to have largely similar policies, with neither placing any significant emphasis on property reform.
The focus, in the main, seems to be on the private rented sector, which means homebuyers and sellers with sales already progressing, are unlikely to experience any disruptions.
Granted, the pace of new sales being agreed in the coming weeks may stall slightly, but with key economic data remaining ‘encouraging’, even this looks unlikely to dent the bigger picture of market sentiment, particularly among industry experts.
A Picture of (property market) Health
In the main, their opinion is that there is confidence to be drawn from mortgage rates remaining relatively stable (between 4.5% and 5%) and the knock-on effect this is demonstrably having on buying power.
In addition, the Bank Rate of 5.25% has remained unchanged since August last year, which is creating a sense of stability, while house prices have risen 1.8 per cent over the past year (according to HMRC Land Regsitry.) In addition, inflation has cooled to 2.3% (the lowest level in nearly three years, and close to the BoE’s target figure of 2%) and sales volumes are continuing to increase overall.
Adding weight to this theory of ongoing market recovery, is the finding that the number of homes currently in the sale pipeline, is actually 3% higher than this time last year.
In response to these positive signs of increasing demand, both political parties have initiated plans to boost housing supply, with many developers following suit with active plans for new developments.
Summary
Of course, it is prudent to point out, that we are approaching a naturally slower period for the market, as we head into the summer. However, some of the effects of the holiday period may well be negated by the improving trajectory of wage growth and economic health, coupled with a predicted pivot towards lower rates in June – the domino effect of which will likely be felt most keenly, in the second half of the year.
Should this shift come to fruition, affordability constraints will ease at the lower end of the market, thereby offering further protection to the chains that are currently in progress.
This will inevitably have a positive impact on the market overall, as will (quite inadvertently) the ongoing pressure in the rental sector, which is effectively strong-arming more first time buyers onto the ladder, than might have taken the leap otherwise.
With upsizers also now taking advantage of the typically lower borrowing costs, the prediction is that demand will remain sufficient to prop up house prices for the remainder of 2024, putting paid to theories of a post-election setback to this market's slow but steady recovery.
For more detailed local market insight, please contact Braxton on 01628 674234 or email property@braxtons.co.uk