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Housing market optimism rises following election

The latest survey from the Royal Institution of Chartered Surveyors (RICS) indicates a renewed sense of optimism in the UK housing market following the recent general election, with expectations of increased sales and stabilising prices.

Increased confidence in sales
Survey respondents showed increased confidence in the housing market, anticipating a rise in sales over the next three months. A net balance of +20 respondents expect a recovery in residential sales, the highest level since January 2022. This optimism stems from the newly elected Labour government’s strong commitment to housing, including a pledge to build 1.5 million homes over the next five years.

Challenges with affordability and supply
Despite the positive outlook, challenges remain. A net balance of +54 respondents believe house prices will continue to rise over the next year, posing a significant challenge for the new government. Tarrant Parsons, RICS Senior Economist, highlighted the potential impact of falling mortgage rates on affordability: “If the Bank of England does decide that the current inflation backdrop is benign enough to start loosening monetary policy next month, this may prompt a further softening in lending rates. In addition, the recent election delivered a clear outcome, with housing pushed up the political agenda.”

Rental market pressures
The rental market also faces ongoing pressures, with demand continuing to outstrip supply. A net balance of +28 respondents reported an increase in tenant demand in June, while new landlord instructions saw a decline, dropping from -3 to -11. Looking ahead, a net balance of +38 respondents expect rental prices to rise over the next three months.

Sarah Coles, head of personal finance at Hargreaves Lansdown, commented on the situation: “A new government has breathed a new air of optimism into the property market. Agents are hoping this means sales will pick up, and falling house prices will reverse in the year to come. It’s the most positive agents have been about sales since the start of 2022.”

Summary and advice for buyers
The housing market’s future remains uncertain, but the recent election has injected a sense of optimism among agents and market participants. Sarah Coles advised buyers to act cautiously: “If you’re looking to buy right now, this remains a buyers’ market, so there should be some bargains to be had. However, it’s vital you don’t overstretch yourself. As well as sticking within your budget, you also need to protect your emergency fund.”