Election result has placed the market under starter's orders

Just a week after Labour’s landslide election victory and already their top team is coming under scrutiny and being asked to put their money where their mouth is.

On Monday, new Chancellor of the Exchequer, Rachel Reeves, gave a speech at the Treasury putting housebuilding firmly at the top of her growth agenda.

House building targets will be re-imposed on local authorities in a move to ensure that Labour’s ambition to build 1.5 million homes by the end of this Parliament is fulfilled.

And she said that her colleague, Deputy Prime Minister Angela Rayner, who doubles up as Secretary of State for Communities and Housing, will write to each authority to ensure they are prioritising brownfield and greybelt sites to meet those targets.

She is, she said, turning growth from a manifesto commitment into a national mission.

Powerful stuff. But changes to the national planning policy framework are hard-fought, drawn out affairs with obstacles of NIMBY-ism and vested interest creating obstacles at every turn.

Proved its resilience

The target Labour has set itself is huge – requiring rates of housebuilding not seen since the late 1960s.

And where will the builders come from? The construction industry is already reporting a shortage of skilled workers from bricklayers to plasterers.

According to the latest Construction Skills Network report, around 225000 new construction workers are needed by 2027 to satisfy demand.

All of this tells me that there will be a battle ahead as Labour attempts to ‘get Britain building’. And we aren’t going to know who the winner is for several years to come.

Of course, we all agree with Reeves when she says she wants more home-owners but the truth is, agents are more interested in the here and now.

Most of us in the industry know that the property market has been revving up since the beginning of the year without really getting very far. A cut in interest rates combined with an end to political uncertainty could be the things that finally put it into gear and moving forward.

Heaven knows the housing market has proved its resilience.

According to the latest figures from Zoopla:
•    House price inflation was flat at 0% in May 2024, but UK house prices are on track to be 1.5% (£3,900) higher by the end of 2024
•    UK house prices are currently 8% “overvalued” but will be “fairly valued” by the end of the year due to rising incomes
•    House prices have risen across all regions over the last 3 months

A stable long-term Government, falling inflation and an imminent cut in the base rate (not seen since March 2020) might well be enough to unleash the pent-up demand that we know has been bubbling away for months.

City commentators have been factoring in the possibility of a Labour Government for the last six weeks and in the City, the markets have remained steady throughout the campaign.

The landslide majority of 172 simply strengthens that message of stability. This could give prospective homebuyers the confidence they need to get moving now before prices begin to rise again.

Agents should prepare for action and expect a hike in activity. And they should be prepared to put in the hard work to nurture every lead generated – the competition is going to be tough but more business will be there to be won before the year is out.