Marketing Director, Perry Jax, at award winning property investment company Alesco, commented on Labour's first four weeks in Government, the shift in buying habits from property investors and how the Bank Rate of 5% has influenced property.
“In the month since the Labour government came into power, we’ve seen a significant shift in the buying habits of property investors. Confidence among buyers and sellers is growing, with an increase in homes for sale and buyers paying a larger share of the asking price.”
How has the MPC decision to lower the Bank Rate by 0.25% to 5% affected the property market?
“At current it seems to be particularly positive for both buyers and sellers seeking to refinance their residential mortgages, as it’s expected to lead to decreased borrowing costs. This increased affordability holds many options, and financial advisers are expected to play a pivotal role in guiding borrowers towards the most affordable deals for their long-term financial stability.
“With this 0.25% reduction it should alleviate a lot of obstacles that have restricted buyers in the UK during a period of elevated inflation and borrowing expenses over the past two years. We’ve seen that there has been a surge in property prices and an increase in the number of property listings entering the market. We’re expecting that this decision from the Bank of England will hopefully continue to stimulate interest from previous investors who have previously been hesitant to buy or sell.”
“However, despite the rate cut, borrowing costs continue to remain at notably high levels, underscoring the ongoing importance of flexibility for both borrowers and brokers.”
How has Labour’s influence so far affected the property market?
“While it's still early to make definite conclusions, it seems that potential new property investors are showing caution as they await full details of Labour's plans before entering the market. On the other hand, the change in government hasn't discouraged experienced investors. Many recent sales have involved seasoned investors purchasing multiple units in a single transaction, indicating their confidence in knowing where to find the best returns. New investors may need more guidance to achieve their investment goals.”
“Immediate impacts from the new government or the King's Speech over the next 12 to 18 months are not expected, but longer-term effects are possible. The housing market is closely linked to the broader UK economy, and government policies focused on economic and income growth will benefit both home buyers and renters. In the short term, the Bank of England will have a significant role in influencing the market, particularly depending on the timing of the first base rate cut.”
Perry Jax looks towards the next 6-months and what this could mean for hopeful property investors.
“While a four-week timeframe may not suffice for predicting the next 6-12 months or the full term, we expect that market confidence will steadily increase once the government is fully settled. As a result, transactions on UK buy-to-lets are likely to return to pre-election levels.”
