Mehran Charania, director of Ready Steady Store
In recent times, the UK property market has been nothing short of turbulent. Rising mortgage rates and the cost-of-living crisis have cast a shadow over the housing sector, leaving many uncertain about their next move. However, amidst this uncertainty, the election of the new Labour government provides some hope for home buyers.
With new policies and promises from their manifesto, many will be contemplating what this new government will bring to the housing market, inspiring homeowners and prospective buyers to contemplate – is now the right time to join the hunt?
Promising new policies for first-time buyers
Labour’s election manifesto has been ambitious in addressing the housing crisis, particularly for first-time buyers. Proposing to address housing affordability through measures like its Freedom to Buy scheme, Labour aims to assist young people with deposits and low-interest loans to help them get onto the property ladder.
This initiative includes provisions for helping individuals with deposits and providing low-interest loans, thereby easing the path to homeownership for those currently finding it difficult to save for a deposit amid high living costs and rental prices.
Additionally, Labour’s commitment to building 1.5 million new homes is set to increase the housing supply significantly. By boosting the availability of homes, the new government aims to stabilise or even reduce house prices, making it easier for first-time buyers to enter the market.
Mortgage rate stability
Under the previous administration, the property market experienced turbulence, particularly in terms of rising mortgage rates, which had put substantial financial pressure on homeowners and prospective buyers alike. As of June 2024, the average mortgage rates in the UK have stabilised somewhat. According to Finder, for a two-year fixed-rate mortgage, the average interest rate is currently 5.42% and five-year fixed-rate mortgages average 5.04%.
Labour’s approach to mortgage rates is expected to focus on maintaining and potentially lowering these rates by addressing broader economic factors such as inflation. If the Labour government can continue to reduce inflation, then a gradual reduction in mortgage rates could occur, making home loans more affordable and accessible for all. This stability is crucial for long-term planning, especially for those looking to secure a mortgage without the fear of sudden rate hikes.
Improved affordability
The new government’s pledge to construct 1.5 million homes is one of its major plans for its housing strategy. By increasing the housing supply, Labour aims to tackle one of the most pressing issues: affordability. More homes on the market can alleviate the pressure on prices, which have been rising due to high demand and limited supply.
Moreover, with more housing available, buyers are likely to find a wider range of options that better meet their needs in terms of space and cost. This is particularly important given the current challenges where many are forced to opt for less-than-ideal housing solutions due to the financial strain of high mortgage rates and house prices.
It’s a waiting game
While the keys to number 10 have only just exchanged hands, the new policies promised by the Labour Government could mark a turning point for the UK property market, especially for first-time buyers and those struggling with affordability. By focusing on increasing the housing supply and stabilising mortgage rates, the government aims to create a more accessible and equitable housing market.
For those considering entering the property market, this period of political change offers an opportunity to plan strategically and take advantage of potential new benefits. In the meantime, alternatives such as self storage can offer a practical interim solution, providing necessary space without the financial burden of high mortgage repayments. This approach allows potential buyers to better position themselves for entering the market once conditions improve.