UK Housing Market 2024: A Forecast Amidst Political Changes:

As the UK gears up for the general election in July 2024, the housing market presents a mixed bag of results. While house prices are stable compared to May 2023, standing at an average of £264,900, the market dynamics vary significantly across regions. Some areas witness growth, while others experience declines.

Current Status of the Housing Market:

As of now, house price inflation is neutral year-on-year, maintaining the average price at £264,900, identical to last year's figures. This stability reflects a balanced market where neither significant inflation nor deflation in property prices is occurring.

However, it's not all static. In Southern England, the annual inflation rates remain negative, albeit with a narrowing margin, while other regions in the UK have seen price increases.

Market Dynamics as Election Nears:

The forthcoming general election adds an element of uncertainty, typically prompting potential home buyers and sellers to act more cautiously. Historically, election periods tend to slow down market activity, but this year the impact might be less pronounced due to minimal policy differences between the major political parties concerning housing.

Both the Conservative and Labour parties have focused on enhancing the private rental sector and increasing housing supply. The Conservatives have pledged to permanently eliminate stamp duty for first-time buyers on properties up to £425,000, potentially benefiting 8 out of 10 first-time buyers who currently pay no stamp duty.

Labour, while yet to detail their full housing policy, has hinted at making the mortgage guarantee scheme permanent, aiding first-time buyers with smaller deposits under the 'Freedom to Buy' initiative. This could help approximately 80,000 young people ascend the property ladder over the next five years.

What to Expect by Year-End:

By the close of 2024, the UK housing market is expected to witness a modest increase of 1.5% in average prices. This projection is underpinned by a robust sales pipeline, with 75% of the anticipated 1.1 million sales for the year either completed or in progress—a significant recovery from the slower sales activities of the past years.

Despite the steady prices, the real determinant of future housing market dynamics will be mortgage rates, which are influenced by the broader economic policy settings post-election. Currently, mortgage rates average between 4.5% to 5%, and any shift in fiscal policies post-election could either stabilise or unsettle the market further.

Conclusion:

As we navigate through 2024, the UK housing market remains resilient, supported by strategic policy measures and a slowly improving economic backdrop. With political stability post-election, we might see renewed confidence in the market, supporting both property prices and sales activity into 2025.

For homeowners, buyers, and investors, keeping a close eye on political developments and their potential impact on mortgage rates will be crucial. As always, aligning property investments with long-term financial goals and current market conditions will be key to navigating the post-election landscape.

Written by Veera Josey, 1st July 2024

Source, Zoopla, BBC News