The property market is set to benefit from a post-election bounce that could bring more favourable conditions for first time buyers, according to industry experts including estate agents. While general elections usually create uncertainty that is detrimental to the housing market, this time the effect could be reversed.
This is because the new government with a significant majority in parliament brings a sense of stability and optimism that has been missing for the past few years. The goodwill effect could be boosted further next month if the Bank of England decides to cut interest rates from a 16-year high of 5.25 per cent, which will help to bring down mortgage rates.
Labour have also pledged to introduce new housing policies that are targeted to help first time buyers, including setting new home building targets and ensuring that new buyers have first refusal before they are offered on the wider market. This will help to ease the imbalance of supply and demand that is keeping property prices unaffordable to many.
For those already on the housing ladder and planning a move this year or next, there may also be better news ahead. For the past 18 months, there has been sluggish activity with fewer buyers and sluggish prices. However, as interest rates fall and the cost of living crisis eases slightly, the pace is predicted to pick up again.
Speaking to the Manchester Evening News, Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “A stable political environment can potentially deliver a confidence boost to the housing market, particularly one that has struggled over the past year with high borrowing costs and a dearth of available and affordable stock.”
She added: “Buying a first home, upsizing and even downsizing are all major personal finance decisions, which is why confidence in how your country is run is vitally important. Interest rates have remained at a 16-year high of 5.25% for almost a year causing major affordability challenges for first-time buyers and those looking to move to larger homes.”
“While the combination of lower inflation and strong wage growth has offered a slight boost to housing affordability, for many the dream of home ownership is still out of reach.”
“Throw in interest rate cuts, however, with the first reduction expected as early as next month on August 1, and, in turn, more competitive mortgage rates, and the market could experience a surge in demand.”
It is hoped that this momentum will continue to build throughout the rest of the year, with house prices set to rise modestly and more buyers having the confidence to enter the market. In the longer term, more targeted housing policies may help to ease the pressure in the rental sector as the housing stock is increased and landlords return to the market.
