New Homes: Election result emphasises need for new homes
The recent result of the General Election would have done nothing to help create short-term stability for the housing market. But as things begin to settle down, experts believe that a robust housing market will still focus on the need to build more affordable houses as part of the governments ‘Homes for all’ policy.
Online Mortgage Advisor’s top finance expert, Pete Mugleston, takes a look back at the housing policies in both the Tory and Labour manifestos, as well as what he feels the result will mean to the future housing market.
‘The number of people buying their own home has decreased considerably over the last seven years, with young people being worst hit because homes are simply too expensive and too competitive for first time buyers’ suggests Pete.
‘As part of its “Homes for all policy,” the Tories want another million new homes built by 2020, with another 500,000 by 2022, which seems to be an extremely rigorous policy and begs the question, exactly where will these homes will be built?’
‘The Tories have very kindly offered for 160,000 of these to be erected on its own land, which would also raise capital to inject into other services – a win-win for the government’. Our expert continues; ‘Another policy the Tories are hoping to push through is an updated Right to Buy scheme, allowing councils to sell homes after ten to fifteen years of construction, with the current tenants getting first refusal. This will not only open up an opportunity for those who previously thought getting on the housing ladder was beyond their reach, but it would also contribute towards freeing up more properties for house hunters to purchase. These policies would also bring down the cost of house prices as developers are forced to be more competitive’.
So what did Jeremy Corbyn’s Labour outline?
‘On the other side of the fence, Labour’s housing pledges follow the line of “Secure homes for all.” The party wants to establish an entire department committed to tackling the UK’s housing crisis to make sure any new homes being built are targeted at those wanting to jump on the housing ladder rather than investors that view it as a profit opportunity.’
‘What Labour does want to do is help people who have been priced out of the market get on the housing ladder, by extending Help To Buy for another ten years. It also wants to stop local people being priced out of their local market, by limiting how many people on the scheme living outside of the area can apply.’
Mugleston explains: ‘Although that’s great for current residents who can afford their local area, those already living in high-cost areas such as London would struggle to move outside. It would also stop those looking to relocate for other reasons (such as a new job) being able to get on the Help To Buy scheme elsewhere.’
Looking forward, what does our financial expert feel the futrue holds. ‘With rising house prices, what’s clear is that affordable homes need to be made available to the hundreds of thousands of people who are paying above the odds for rental properties.’
‘Although it’s unclear what impact this will have directly on the mortgage market, lower-priced properties means house buyers will be looking for smaller loans, offering a better loan to income ratio. This represents less risk to lenders and makes it more likely banks will be happy to lend the cash needed for everyone to buy a home.’
‘Looking forward, we know the Brexit vote last year caused stagnation in the market and we experienced a signifi cant downturn in traffic and enquiries from customers looking to move, but things bounced back.’
So what next?
‘Following on from the result on the 8th June, we anticipated a similar (perhaps to a lesser degree) trend, but in fact appetite for mortgages remains strong. We expect to endure a bumpy ride, but for us at least, it has absolutely been business as usual.’
A similar outlook, post general election, has been predicted by some of the countries leading home builders.
Stephen Stone is the chief executive of home builder Crest Nicholson:’The outcome of the UK General Election may introduce some uncertainty in the short term but we expect the new build housing market to remain robust’.
‘Strong levels of employment, low interest rates and good mortgage access – including through the Help to Buy Scheme – should all contribute to a sustainable new build housing market.’ continues Mr Stone.
One of the most telling aspects of the recent General Election vote was that 72% of 18-24 year olds turned out to vote on June 8th, up from 66% in 2015, with the vast majority backing Jeremy Corbyn’s Labour.
There is no doubt that young people priced out of the housing market was a key reason they turned out in droves to back Labour. As mentioned previously, the policy of the opposition is to help those priced out of the housing market and help them get on the property ladder.
If there are positives to come out of the recent vote, then Politicians will have to consider the needs of the young more than they have in the past which could mean more help for fi rst-time buyers. We may well see an extension of the Help to Buy Scheme so that it covers older properties as well as new build, dealing with affordability issues and more help on stamp duty.
One thing is clear, despite continued instability, all parties realise the need for greater housing stock with an empahsis on those previously priced out of the housing market.