The Government will need the financial markets to play ball if its housebuilding plans are to be successful, a property expert has warned.
Labour has pledged to build 1.5m homes during the next parliamentary term but Alasdair Dunne, head of residential and rural agency at Fisher German believes this will only work if interest rates drop.
He said: “Ultimately, the key to getting the market moving again is the cost of borrowing. There is a lot of pent-up demand from frustrated home movers who are finding current lending rates unaffordable or are simply holding tight for better deals to be offered by lenders.
“If the much-anticipated drop in the Bank of England’s base rate materialises at the end of summer or early autumn, mortgage providers will be able to offer lower interest rates on their products, which will really stimulate market activity.
“In turn, a more active market will give housebuilders the confidence to step up their building programmes in the knowledge their homes will be in demand.”
Dunne said the Bank of England’s financial policy over the next few months and how lenders react will be the biggest driver for the markets, but having a government determined to get the builders building will also help.
He added: “As you might expect from a government that has been in opposition in the last 14 years, Labour have made bold statements around housing and planning which on the face of it may seem difficult to deliver.
“But if inflation falls and stays under control like forecasts are saying and the Bank of England feel confident enough to lower the base rate, the market should significantly improve in autumn before really bouncing back in 2025.
“While Labour’s targets are ambitious, if the market plays ball, they might just achieve them.”
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