Property market challenges leading up to the general election

Jun 18, 2024
The latest residential market survey from the Royal Institution of Chartered Surveyors (RICS) provides food for thought for the UK's political parties as they gear up their campaigning ahead of the General Election on July 4. Millions of voters are feeling both the cost of living and market impacts. The political parties see this and are trying to entice the electorate with proposals in their manifestos.
•  Demand for rental property continues to rise alongside lack of supply
•  Near-term sales expectations still point to recovery but policy support could accelerate recovery
•  Longer term thinking is needed to fix the current issues in the market
Critically, the research reveals that confidence in the UK’s housing market is beginning to ebb despite a markedly improving outlook over the last few months. Meanwhile, there remains a huge mismatch in the private rented sector (PRS), with demand continuing to significantly outstrip supply, leaving renters tackling ever-rising living costs and plummeting affordability levels.
The UK's lettings market is facing growing challenges, and it will be interesting to see how the political parties address this. Tenant demand rose notably to +35% (net balance), up from +10% in May.
The growing gap between supply and demand for lettings indicates that rental prices will continue to rise for the foreseeable future, albeit at a slower pace than previously.
As confidence regarding an imminent cut in interest rates has ebbed, and the cost of living crisis continues to bite, there has been a small drop in new buyer demand in the sales market, with a -8% (net balance) result recorded nationally compared to the flat picture reported in April. This latest figure is the lowest reading for new buyers since November 2023. Buyer demand was weakest in the South East and South West of England.
Respondents to the survey also reported a fall in the number of sales agreed during May, although, it is expected that sales volumes will rise modestly over the coming three months. Moreover, the outlook for twelve months ahead remains relatively upbeat, with +43% of survey participants anticipating an uplift in sales activity, rising from +33% in April.
RICS Chief Executive, Justin Young: "With higher interest rates continuing to hamper first-time buyers, politicians are looking to win support from this group of buyers –as the Conservatives have done with Help to Buy 2.0 and Labour with the Freedom to Buy promise."
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