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‘Concrete plans’ to address housing affordability and undersupply needed in election campaigns, brokers say

  • 23/05/2024
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‘Concrete plans’ to address housing affordability and undersupply needed in election campaigns, brokers say
The upcoming general election will hopefully place a focus on improving affordability and undersupply in the housing market, brokers have said.

Yesterday, Prime Minister Rishi Sunak announced that a general election will take place on 4 July.

John Phillips, CEO of Spicerhaart and Just Mortgages, said that Prime Minister Rishi Sunak and his government were using the positive news on inflation as “their moment to move”.

“It still feels somewhat like turkeys voting for Christmas – especially if polling figures and general sentiment [are] anything to go by.

“Nevertheless, now we finally have a date, it will be interesting to see how the main parties ramp up their campaigns – and how housing and mortgages will fit into their plans. This is especially true for Labour and Keir Starmer, who set out their ‘first six steps’, which did not include a plan for housing,” he noted.

Phillips said that, while market conditions have improved, it is “still far from plain sailing for many borrowers”.

He continued: “We certainly need to see some concrete plans on how they plan to answer the clear affordability challenges that remain in the market, as well as the persistent undersupply of housing. An action plan is also needed to encourage landlords to remain in the market to support the millions of households that rely on the private rental sector.

“With real pressures on affordability, it would be fantastic to see a return of scheme[s] such as Help to Buy or something similar that includes second-hand homes. Given that it is proving to be the main way buyers are getting onto the property ladder in the current climate, it would be great to see more support given to the likes of Shared Ownership and other low-deposit schemes.”

Maria Harris, chair of the Open Property Data Association (OPDA) agreed that the sharp fall in inflation was a “key factor in firing the campaign starting gun”, adding that it will be “interesting to see whether there is more good cheer for voters in terms of interest rate cuts”.

She continued: “Whichever party forms the next government, we continue to deal with the challenges of a broken housing market. New ministers will need to tackle these urgently. Top of the list should be digitising our property data and resolving the notoriously sluggish homebuying process.

“The OPDA recently gave evidence to the Levelling Up, Housing and Communities select committee’s Improving the home buying and selling process inquiry, calling for the entire homebuying and selling process to be digitised within three years. We appreciate the issues with supply and quality of housing, but sharing digital property information across the housing market is a vital first step towards improving customer confidence in the homebuying and moving process, and will slash contract exchange times significantly, contributing millions to GDP.”

Nathan Emerson, CEO of Propertymark, added that housing was the “cornerstone of every single community” and was the “foundation to a strong economy”, so it should be a “key theme” that all political parties put “front and centre” of their election campaigns.

He said: “Many successive governments have failed to keep pace with demand, and we would encourage potential policy makers from all sides to place a rejuvenated emphasis on tackling current issues and meeting future demand.”

Emerson said that there must be a “sustainable mix of housing solutions for both buyers and renters”, including a comprehensive support for first-time buyers and ensuring the housing market “remains balanced for all”.

“It is also important there is a full scale commitment to ensure wider infrastructure is also planned for, as we witness an ever-growing population,” he noted.


General election can significantly impact mortgage rates

Nicholas Mendes, mortgage technical manager at John Charcol, said that a general election “can significantly impact mortgage rates, often indirectly, through its influence on economic conditions, investor confidence, and monetary policy decisions”.

He continued: “During the run-up to an election, uncertainty about the future political landscape typically causes financial market fluctuations. This instability can prompt lenders to adopt a more cautious approach, potentially delaying significant rate reductions until the economic outlook becomes clearer.

“Once the election results are known, the outcome can either alleviate or exacerbate market uncertainties. A decisive victory and a clear mandate for the winning party often lead[s] to increased economic confidence and stability, which, coupled with falling inflation and future bank rate reductions being priced into swaps, can positively influence financial markets and mortgage rates.”

Mendes said that a June bank rate cut looks “doubtful”, while rate cuts in August seem “more likely” as the Bank of England may not want to make “significant changes during an election period”.

He noted that the policies of the winning party also “play a crucial role in shaping mortgage rates”.

“If the new government implements measures aimed at stimulating the housing market, such as tax incentives for homebuyers or reforms to mortgage regulations, it can influence lenders’ products.

“For example, the impact of the stamp duty holiday and Help to Buy scheme supported the first-time buyer market and the property market in the past. Policies that promote economic growth and stability generally lead to lower mortgage rates, as lenders feel more secure in a robust economic environment,” Mendes added.

He noted that “expansive” fiscal policy could lead to interest rate rises to curb inflation, leading to higher mortgage rates, and on the flip side, a focus on austerity and reducing public debt might lower interest rates and make mortgages more affordable.

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