The best way to judge the UK housing market is to check on what’s happening in Parliament, not the price indices nor the Bank of England.
That’s the view from Tom Bill, research guru at Knight Frank, as the country anticipates a series of policy announcements around the tie of the Autumn Statement in three weeks time.
Knight Frank says this trend towards politics not markets is already underway, with recent media reports suggesting the government is considering measures to help buyers, including extending the mortgage guarantee scheme which enables lenders to offer 95 per cent mortgages, as well as other proposals to encourage saving for a deposit.
But Bill cautions: “There’s only so much the government can do given the bigger picture of interest rates that are normalising after 14 years. It has been a white-knuckle ride for anyone buying or re-mortgaging over the last 18 months … Stubbornly-high inflation means the seasonal autumn bounce in the housing market has been minimal this year … as buyers come to terms with higher rates and sellers with lower asking prices.”
He says a more eye-catching plan reportedly being considered by the Chancellor is a stamp duty cut.
Bill says such cuts have to happen immediately and rises (or the end of a stamp duty holiday) need to happen gradually, not the other way round. Otherwise, the risk is a stop-start market or one that becomes clogged up.
He adds that: “The problem with all speculation at the moment is that the opinion polls currently point to a change of government next year … Discussions about what the government might or might not do feel particularly moot at the moment.
“That extends to the Renters Reform Bill, which is currently going through Parliament. There have been arguments over the abolition of Section 21 no-fault evictions and whether this will need to wait until the courts are ready to cope with the workload. It has become a politically-charged debate, but a Labour government could abolish no-fault evictions whether the courts are ready or not.”
And Bill concludes: “Campaigning hasn’t begun, but these multiplying uncertainties show the election countdown has now started for the UK housing market.”