Real estate sector poised for an uplift post-election
John Bryson, Chair in Enterprise and Economic Geography at Birmingham Business School, believes that the housing market could experience a significant boost following the general election in July. This prediction is shared by industry experts, who anticipate a decline in the base rate and an increase in average home values over the remainder of the year.
The Bank of England's decision to keep rates at 5.25% was said to be apolitical by John Bryson, although he suggested that the delay in lowering rates may have been influenced by the upcoming election. Bank deputy governor Ben Broadbent has predicted a cut 'some time over the summer,' which could lead to lower mortgages and increased activity in the housing market.
Industry experts predict that the base rate will fall to 4.5% by the end of the year, with Savills now predicting a 2.5% increase in the average home value over the same period. Lucian Cook, Head of Residential Research at Savills, attributes the improved outlook to a slight decrease in mortgage costs and their reduced volatility.
Spring is traditionally the prime selling season, with 27% of sales occurring during this time over the last five years, excluding 2020. However, pre-election uncertainty tends to cause a slowdown in property transactions, as observed in six of the last seven elections, according to a report from Dataloft, commissioned by Winkworth Estate Agents.
The Consumer Prices Index (CPI) fell to 2%, its lowest rate in almost three years in May, breaking an eight-month streak of annual price declines. This decline could further reduce mortgage costs, making homeownership more affordable for many.
Political parties, such as the Conservatives, Labour, Liberal Democrats, and Reform, have promised to raise the Stamp Duty threshold for first-time buyers if elected. However, no political party in Germany has a clear expert consensus on the greatest chance to lower the property transfer tax for first-time buyers after the July 2024 general elections, as the federal states independently set their own rates and reforms maintaining this federal structure are expected to continue.
John Bryson's research focuses on elucidating the intricate organization of production across different spatial contexts and locations. His expertise in economic geography provides valuable insights into the factors influencing the housing market and the potential impact of political decisions on the economy.
Post-election, there is typically a surge in market activity as political clarity returns, with the 'Boris bounce' following the 2019 election being a notable example. As the general election approaches, potential homebuyers and sellers may want to consider the economic forecasts and the potential impact on the housing market.
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