Both Labour and the Conservatives are sparring over the state of the housing market.
As we hit summer next year, expect electoral promises around increasing housing supply and reintroducing schemes designed to kick start the housing market by enabling first time buyers access to the market, in return for your vote.This political foreplay has already started with Labour promising to reinstate housing targets.
Emboldened by the current shambolic state of the property market, housing is an easy target to hit the Conservatives with. House price increases stoked by an unnecessary Stamp Duty holiday has left many struggling to now afford a home.
Even with recent price falls, without the low interest rate crutch buyers have become reliant on, many simply can’t afford the same property that they once could, if at all.
This is coupled with low supply levels of rental, social and affordable housing which aren’t due to be restocked anytime soon, due to the Government’s handbrake turn on targets, seemingly bending to the nimby’s middle class will, leaving many disillusioned with the Government and its policies that seem to neglect the many in favour of the privileged few.
Why aren’t the Government building more houses
What every political party knows is they can’t build 300,000 homes now. Build costs have increased whilst buyer affordability has gone down making it financial suicide to build more than is already in the works.
Unless developers are working on build to rent or eco-friendly, state of the art commercial property, they are stalling until inflation is stable and there is an election for a party to win using house building as the carrot.
Be it tightening green belt lines or developing brownfield sites, something will have to give, along with a few nitrates, but not until buyers can afford to buy.
Why homeownership is so important to politicians
Once on the ladder, studies have shown homeowners are more likely to vote and protect their asset’s worth, whilst also taking an interest in the area around it, than renters.
Historically, homeowners gravitated to voting conservative but after their dismal 13 year reign, the public has grown wise to their rhetoric.
Constant policy changes and broken promises have led even the nimby voters who have curtailed many a housing scheme, wondering how their offspring will ever get on the ladder, whilst also firmly remaining in denial about their own involvement.
Every party wants to be the party of homeownership for this reason but also because of the money they can claim via taxation from it.
The more house prices increase the better the “incoming” revenue.
Be it capital gains, inheritance tax or Stamp Duty.
In addition, homeowners generally spend more than renters, vital when boosting economic growth in times when inflation isn’t bloated.
What’s happened to house prices
Low interest rates had become instilled in a generation’s psyche. For the past 15 years interest rates have decreased in an attempt to stimulate growth.
Whilst failing with anything significant here it did bolster house prices with various initiates to bolster them higher (Help to Buy/Stamp Duty Holiday).
Post-Brexit, Covid and the current war, the BoE have voted consecutively, 14 times, to increase rates in an attempt to curb stubborn inflation.
The problem now being that many who own their property outright or have fixed at a lower rate are yet to feel this effect.
So the few are left with the cheque on behalf of the many who can already afford it.
This also results in a divided market where some need to sell, reducing house prices whilst others stubbornly hold out.
But don’t be fooled, all the parties have a vested interest in homeownership and opposition parties will be utilising the Government’s current pickle to their advantage.
Should the Government create schemes or encourage building before an election, the other party can say they were swayed by their political pressure.
The public are mere pawns in this political game for control. Both parties are saying the same things at different times with only one agenda – your vote.
Who gets it depends on who you believe will actually deliver.