What is the incoming prime minister’s top priority when it comes to the property market and helping individuals make decisions about their homes? Read on to know what the property experts including estate agents in harrow feel about the effects the new leadership will have on the housing market.
Economic and financial stability
Everyone, it may be said, is seeking more serenity and stability. Financial markets appear to have received Rishi Sunak’s appointment as prime minister well, helped along by a number of significant policy U-turns made by the new Chancellor Jeremy Hunt. How to get the UK’s finances in shape to assist reduce borrowing rates for businesses and people and to help combat the cost of living pressure is the incoming prime minister’s top priority. The state of the economy, namely the cost of mortgages, which have surged to an average of over 6% in recent weeks, and the health of the housing market are closely intertwined. Especially considering that we are accustomed to mortgage rates below 2%, this has significantly reduced the purchasing power of people wishing to move into a new home.
Rates on mortgages will start to decline
As markets respond to the government’s messaging about balancing the books, the cost of borrowing for businesses and the government has decreased over the previous two weeks and is expected to fall more in the coming weeks. Despite beginning to decline, business mortgage rates are still significantly higher than they were at the beginning of the year. The government still has no control over the future of interest and mortgage rates.
The amount that central banks will need to raise base rates in order to stop the inflation that is raising everyone’s cost of living and decreasing the purchasing power of our salaries is unknown. After a decade of poor returns on savings, there is hope that interest rate increases are about to come to a halt. This is wonderful news for savers, but it means that purchasing a property has grown more expensive. Mortgage interest rates seem set to return to the 4-5% range in 2023. However, anyone looking to purchase a property must understand that the days of really inexpensive money are not returning.
Owning a home and constructing one
Both Labour and the Conservatives have made home ownership proposals public. But if we don’t develop additional houses, it will be difficult to increase home ownership. The 2019 manifesto goal to increase jobs and investment throughout England is still in place, as seen by the return of Michael Gove back to the housing ministry and the levelling up of his ministerial position. In turn, this will increase the supply of dwellings. The industry solution to solve the cladding issues for homeowners in tall residential buildings were pushed through by Gove as well, clearing up a significant area of ambiguity for buyers and lenders. The question of home construction is frequently divisive among locals because they worry about increased demands on municipal services. The new prime minister’s remarks regarding home construction during the summer leadership election imply that he recognises the significance of ensuring that we build homes and the infrastructure to support them. Lessen any additional strain on neighbourhood services. “Reforms to boost density in our inner-cities, investing in recovering brownfield land across the country, and pursuing developments that have community support,” Sunak stated, are things he supports.
Continuing with the reforms for private tenancy?
In England, the private leased sector is likewise undergoing significant reforms with the goal of raising living conditions and redistributing power between tenants and landlords. Again, Michael Gove supported them earlier this year when he served as the housing minister. Given the significant tax changes and greater regulation that took effect starting in 2016 and the absence of new investment by landlords, the rental market is exceptionally tight right now. Although the size of the rental market has ceased expanding, demand for rentals is still rising, which is made worse by the rising cost of home ownership. According to our most recent assessment, rents have increased 12% in the last year, which accelerates the pressure on the expense of living. The argument for rental market reform is compelling, but it must be weighed against the extent to which this will drive landlords out of the market, reducing supply and choice for renters. The most affected are those with the lowest incomes, which prompts calls to increase housing benefits to lower the likelihood of people becoming homeless.
Housing still needs a lot of attention
Since prices and rents are rising and there are also increased concerns about higher borrowing costs, the next prime minister has a lot to do in the housing sector. The short-term forecast for housing shouldn’t be a concern for the government, in truth. They must put their attention on providing long-term stability so that households and companies can make decisions with confidence. The main focus should be on maintaining economic expansion and low borrowing rates, while also fostering an environment that will attract new capital to expand and upgrade our ageing housing stock across all geographies and housing tenures.