RE: Cannot See...8 Jul 2024 20:29
More homes could STOP house price growth
The balance between supply and demand is another important factor in the health of the housing market.
If Labour really does build 1.5million homes in the next five years, that could result in an extra 65,000 homes coming on to the market each year than in 2023 when 235,000 homes were built, according to Government data.
More houses being available could also keep prices lower.
Just over a month ago, Zoopla reported the number of homes on the market has reached the highest level in eight years. It said the choice available to home buyers was helping to keep house prices in check, and that they had fallen by 0.1 per cent in the 12 months to April.
Too little supply means real house prices are five times higher today than they were 50 years ago, according to analysis by Capital Economics - whereas in the rest of Europe they are less than three times higher.
Andrew Wishart, a senior economist at Capital Economics argues that if Labour succeeds with its housebuilding targets, this could keep a lid on house prices.
'In the long run, we think a Labour Government will mean that house prices rise less quickly than we have become accustomed to,' said Wishart.
'Over the past 50 years, UK house prices have risen much more quickly than those in the rest of Europe because of insufficient supply.
'Labour is more likely to be able to meet the 300,000 new home target than the current government because it won't face as much opposition to making planning rules more favourable to development from its own MPs.
'Partly that is because it has a large majority, and partly that is because its voters are less likely to be homeowners than the Conservatives'.
'Moreover, the party's plan to reform compulsory purchase laws means it could require land a little more cheaply, which would help it to deliver more social houses and raise the speed at which the private sector builds homes.'
Wishart is also expecting Labour to continue to target buy-to-let landlords making property less attractive from an investing perspective, removing potential buyers from the market.
He adds: 'It is likely to make buy-to-let investment less attractive, reducing the demand from investors.
https://www.thisismoney.co.uk/money/mortgageshome/article-13596361/What-does-Labour-Government-mean-house-prices.html
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