How a Labour Government Could Affect House Prices
The UK’s housing market has been stagnant for years, with high mortgage rates pricing out buyers. However, experts believe that a Labour government could provide a much-needed boost to the market.
Sir Keir Starmer’s Labour Party has announced a raft of housing policies, which could kick-start the market. The party has promised to build 1.5 million homes over five years, with the aim of getting more people on the property ladder. New buyers will also get first dibs on properties in new developments before they are sold to overseas investors.
Labour’s housing policies could kick-start the market
The property market under Labour may also benefit from base rate cuts from the Bank of England (BoE), which are widely expected to kick in later this year. Cutting the base rate would help to bring down mortgage rates, which would ease pressure on households and could encourage more people to buy or sell their homes.
Alice Haine, personal finance analyst at Bestinvest, said: “Throw in some interest rate cuts from the Bank of England, with the first reduction expected as early as next month on August 1, and the market could experience a surge in demand.”
Several major lenders have already begun trimming their headline deals, and with mortgage approvals remaining robust, house prices may improve from here.
Mortgage rates could fall under a Labour government
Labour’s plans to introduce VAT on private school fees could also push up house prices in some areas, in the same way that top state schools already do. Frances McDonald, director of research at Savills, said: “Labour’s plans to introduce VAT on private school fees could see more demand filtering into the state and grammar school systems which may, in turn, increase the house price premiums we already know are evident around high performing state schools.”
However, experts also say that Labour’s plans to introduce a permanent mortgage guarantee scheme may need a shake-up in order to be effective. The scheme has faced challenges in gaining widespread adoption since its launch in April 2021.
Labour’s mortgage guarantee scheme may need a shake-up
In other news, Barclays has announced that it will reduce rates on a selection of mortgage products, effective from Friday, 5th July. The rate cuts will apply to various residential and buy-to-let mortgage products.
Barclays reduces mortgage rates
The move is expected to benefit borrowers, who have been struggling with high mortgage rates. It is also expected to boost the housing market, which has been stagnant for years.
Overall, a Labour government could have a significant impact on the UK’s housing market. With promises to build more homes and introduce policies to help first-time buyers, the party could provide a much-needed boost to the market.
A Labour government could boost the housing market
