Elevating the UK Housing Market: Priorities for the New Government:

As the UK anticipates changes in government leadership, the focus shifts to potential improvements in housing policies to address current market dynamics. Here are the primary considerations and suggestions for the incoming government:

Current Housing Market Overview

The housing market has displayed resilience despite rising borrowing costs, but adjustments are ongoing. Moving from historically low mortgage rates to over 5% has influenced the market less drastically than expected due to stringent mortgage regulations established in 2015. These measures prevented excessive debt-fueled housing price inflation, resulting in only modest price declines.

Challenges for First-Time Buyers

First-time buyers, particularly in London and the southern regions of England, face significant financial hurdles. The disparity in income and deposit requirements between the north and south of the UK is stark, affecting what type of housing can realistically be developed to meet local needs.

The Rented Housing Market

The private rented sector has seen a halt in growth since 2016 after a rapid expansion. With some private landlords exiting the market due to less lucrative returns on investment, there's a shift toward more professionalized rental management. However, the private rental market still plays a crucial role in the overall housing supply and demand balance.

Government Action Items

• Rental Reforms Over Rent Controls: Implement reforms that improve the rental market's function without imposing strict rent controls. Adjust Housing Benefit levels to more accurately reflect the current market conditions, aiding those most affected by rental affordability issues.

• Encouragement of Long-Term Landlords: Ensure that policies support long-term, cash-flow-focused landlords who are committed to providing quality homes, thereby stabilising the rental market.

• Increase Housing Supply: The government should set broad national housing policies while empowering local authorities to tailor solutions to their unique demographic and economic circumstances. This involves reforming the planning system and making substantial investments in local planning authorities.

• Support for Affordable Housing: Enhance the financial framework to boost the supply of affordable homes, addressing one of the most acute needs in today's market.

• Market Outlook and Projections: With nominal house price inflation expected to remain low, the government's strategy should bolster confidence among homebuilders and buyers alike. Predictions suggest a gradual rise in house prices by 2-3% over the next few years, contingent on supportive policy measures.

Conclusion

As we navigate through these evolving times, the new government has a pivotal role in shaping a housing market that is equitable, sustainable, and responsive to the needs of all UK residents. The focus should not only be on building more homes but also on enhancing the quality and accessibility of housing through thoughtful, informed policy-making.

Written by Veera Josey, 10th of July 2024

Source, Zoopla, BBC News