UK PROPERTY MARKET update: june 2024
July 02, 2024
As election fever reaches its pinnacle in the UK this week, we bring you our monthly update of what’s going on in the UK property market this month. We’re also analysing what effect the outcome of the election may have on the housing market – and it’s pretty good news either way!
Read on for more…
What happened in the UK property market this month?
In a nutshell:
Average UK house prices nudged up by 0.2% taking annual growth to 1.5%
The number of houses available to buy on the market increased (which reflects the number of buyers coming back onto the market). According to Zoopla there was a 20% increase in the level of available stock, year on year.
Meanwhile, RICS reported sales levels are almost back to their pre-pandemic average (2017-19). Activity is picking up significantly.
Elite London buying agencies reported bidding wars for top of the market properties showing a return of confidence in the prime London market.
Rental growth eased slightly, but still remains at +6.6% annually.
Despite inflation hitting the target of 2% the Bank of England chose not to reduce the base rate at their June meeting, probably to avoid any accusation of political meddling in the wake of the election being called. Financial markets are now focusing on 1 August, the bank’s next MPC meeting, as the likely date for a cut.
How will the UK election effect UK buy to let property investors?
We looked into our crystal ball and it said the housing market will carry on regardless…
Using data from the Nationwide House Price Index we charted the housing market against each Prime Minister and found that political parties – with the exception Liz Truss’s brief regnum – had very little effect on the overall trajectory of the housing market.
The highest periods of growth came under the premiership of Thatcher, Blair and the extraordinary circumstances of the pandemic, under Johnson, reinforcing our message that property investing is best meted out with a long-term view.
What are the policies?
According to the polls, housing is the fourth most important issue to voters and there’s not a huge amount of difference between the manifestos either party have pledged. Top of the list is the resurrection of the Help To Buy Scheme for first time buyers, which has in the past directly contributed to steep growth of prices in the new build market.
Under Sunak’s Chancellorship, the Conservatives replaced Help To Buy with a mortgage guarantee scheme to offset risks to lenders. As Savills’ Lucian Cook points out,
“At the heart of the issue is the tension in reducing the deposit needed to get more people on the housing ladder in a way that doesn’t create undue risk for lenders, further inflate house prices or leave borrowers too financially exposed.”
It is a very delicate balancing act. Labour’s answer is the Freedom To Buy where mortgages between 91% to 95% up to the value of £600k would be granted to first time buyers. Meanwhile the Conservatives are talking about granting equity loans up to 20% of the property’s value with 5% deposits. Both apply only to new build homes.
Analysts suggested that whilst this may indeed aid buyers in the North or Midlands, due to affordability issues it would do very little to aid first time buyers in the south. If the effects were anything like Help To Buy, they would no doubt boost the price of newbuilds in Birmingham and Manchester, showing how first time buyers really do provide a bellwether of the market to come. As such, these types of policies are good news for investors.
Supply is another hot topic with lots of ambitious figures being tossed around, bearing in mind UK new build housing supply is the lowest it has been in years. Labour have pledged to increase the number of planning officers (surely a good thing), funded by a stamp duty on foreign buyers (probably a bad thing for most of our clientele). With one hand they give – and with another they take it away…Yet supply is the issue both parties need to contend with if they want a return to a more balanced market, without the boom and bust of recent years.
Labour aims to boost supply by 1.5 million homes (we told you they were ambitious!) by releasing ‘grey belt’ land (that is land suitable for development that could be released from the greenbelt) and would fast track planning permissions on brownfield land. They do however, aim to hold themselves accountable by immediately restoring mandatory housing targets.
On the tax front, the Conservatives have pledged Capital Gains Tax relief for landlords if you sell a property home to sitting tenant – within two years. And this is pretty much the only difference between the two when it comes to housing policy. If you are interested in the details of the different housing policies then Zoopla have a handy guide here.
The RPA View
At the risk of sounding glib, based on the long-term perspective we advise our clients, and as per the data we’ve illustrated above, the current crop of policies are all largely moot. Markets work in cycles. Whatever the result we’ll continue to bring our clients the best of the UK investment property opportunities. From where we’re sitting it looks like we are on the precipice of another UK house price increase curve – regardless of whether 10 Downing Street turns red or stays blue on Thursday.
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about the AUTHOR
Managing Director
richard bradstock
RPA’s founder, Richard has worked in residential development investment for 20 years and oversees the general running of the business ensuring the RPA Group retains true to its founding principles. Over his career Richard has built an incredible network of international property investors and like-minded industry professionals. The RPA Group was born out of a duty of care to provide property investors with an industry-leading and integral service, one that connects investors with quality and desirable investment opportunities, whilst providing reliable and trustworthy market commentary and analysis alongside, enabling investors to make the best, most-educated decisions for them.