When Prime Minister Rishi Sunak appeared in Downing Street on 22nd May to announce that a general election would be held on 4th July, the news was greeted with some surprise. Up to that point, bets had been on an autumn election, most likely in October.
Following the PM’s unexpected decision to call a summer election, property pundits have been considering how the nation’s voting decisions might affect the UK housing market. Our estate agents in Ilford have joined forces with our Wanstead estate agents to find out what the experts are saying.
Most importantly, our agents have been keen to discover how the election will affect home buyers, sellers and investors in east London and Essex.
Do housing market trends change before an election?
In the past, we’ve come to expect a ‘wait and see’ attitude before elections, as buyers and sellers hold back to see if the incoming government’s policies will affect house prices. However, this time around, there’s little sign of a pause in market activity.
Ninety five per cent of the 14,322 individuals who took part in Rightmove’s spring survey said that the general election would not affect their plans to move home. Rightmove has also analysed market behaviour around the last two elections. This shows that conditions remained steady before the elections in 2015 and 2019.
Early summer is one of the best times of the year to list a property, so you could miss out by delaying your home move now.
Is the economy improving?
The incoming government will be looking for signs that the UK is recovering from its economic woes. Over the last two years we’ve seen interest rates going through the roof, affecting the cost of mortgages as well as the price of goods in the shops.
The good news is that inflation is now on its way down, falling from a high of 11 per cent in October 2022 (the highest rate in 40 years) to just 2.3 per cent today. The rate has almost reached the Bank of England’s target of 2 per cent, raising expectations that the base rate (which affects the price of mortgages) could fall.
A drop in the base rate is expected very soon: either this month (the Bank’s next meeting to discuss it is on 20th June), or in August. A fall in the rate of interest charged on mortgages would be a further boost to the market.
How will voters’ choice affect the property market?
If you’ve been following the news, you will probably have noticed that Labour has built up a commanding lead over their Conservative rivals (also known as the Tories).
It’s worth noting what both parties have said in the lead-up to the election:
What do the Conservatives say?
Last year, the Conservatives set out their aims for boosting housing supply, with a target of building 300,000 new homes per year by the middle of this decade. Housing Minister Michael Gove has since backtracked on this target, saying the figure of 300,000 is simply ‘advisory’.
The Tories are also considering reintroducing the Help to Buy scheme, although critics have argued that this will push up property prices. They have also pledged to permanently eliminate stamp duty for first-time buyers of properties worth up to £425,000.
The Renters’ Reform Bill aimed to transform the private rented sector. Unfortunately, the Bill has now been abandoned due to the decision to call an early election. If the Conservatives come back into power, some elements of the Bill may be revived.
What does Labour say?
The party wants to encourage home ownership, aiming for 70 per cent of Britons to own their own homes. It will do this by introducing a mortgage guarantee scheme known as ‘Freedom to Buy’, partially funded by increasing the cost of stamp duty for overseas investors purchasing property in the UK.
Shadow Housing Secretary Angela Rayner has outlined ideas for the reform of planning laws, including fast-tracked use of brownfield land sites. The party also aims to build a headline-grabbing 1.5m new homes if it is voted into office.
Labour has also promised to protect renters and ‘rebalance’ the relationship between landlords and tenants, but it says it will not introduce rent controls.
What will happen after the election?
Stability is always good for the housing market, and research by Rightmove has shown there was a small bounce in market activity following the last two elections. It’s highly likely that the prospect of a new government with fresh ideas and an ambition to improve economic conditions will have a positive effect on house prices.
Are you planning a home move in the next few months? Just get in touch with our friendly sales teams in Wanstead and Ilford, and we’ll do everything we can to help.
Give us a call at 0203 972 7341 or email info@oaklandestates.co.uk.
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