So finally we have the news that the date has been set for the country to go to the polls in a general election this summer. We take a brief look below at what this might mean for the property market and if those investment plans should be affected.
The current state of the market
First off lets look at the current state of the market. Houses prices have increased on a monthly basis for the first time since February 2024 in a sign of renewed confidence among buyers and sellers according to figures from Nationwide. The latest Nationwide House Price Index shows average house prices rose by 0.4% in May to £264,249.
When the Prime Minister made his surprise announcement, the country was seeing a growing disparity in house price inflation between the north and south. Despite 16-year high interest rates making mortgages less affordable, there were growing expectations that prices would increase more than expected over the course of 2024. This optimism might be attributed to buyers being more pragmatic about the type and size of properties they choose. Moreover it seems that for much of the North and midlands property remains far more affordable and attainable even with the current high levels of interest rates.
In recent house price index reporting we’ve seen evidence of this growing split between the performance of properties in northern areas compared to southern parts of the UK. Savills expects this trend to continue over the next five years.
Its forecasting has the North West seeing the strongest growth of any region, with the average home seeing price inflation of 28.8% over the period. Yorkshire and the Humber a very close second on (+28.2%). London is expected to perform the wort over the next five years at just 14.2%.
Research by the non-partisan think tank, the Institute for Fiscal Studies (IFS), revealed that home ownership among 25 to 34-year-olds has only recently returned to 2010 levels. By the end of the 2022/23 financial year, 39% of younger adults owned their homes, which is 20 percentage points lower than in 2000. The IFS also highlighted that the home ownership issue is now affecting older age groups, with the number of homeowners aged 45 to 59 down by seven percentage points since 2010.
So will the election have any impact on my decision to buy?
In Conclusion
Clearly a lot depends on policy, but with both parties keen to encourage homebuilding and boost the property market we would expect the usual post election surge in activity. This is likely to continue to see house prices in the north significantly outperform the South, so that is where we believe investors should focus their attention.
