05 July 2024
If you are covering the latest Halifax house price index, please see the following comment from Karen Noye, mortgage expert at Quilter:
“On the dawn of a new Labour government, house prices have remained largely flat once again according to the Halifax house price index, with the average house price in June down just -0.2% on a monthly basis. Meanwhile, the annual rate of house price growth was also steady, matching last month’s 1.6%.
“Time will tell whether a new Labour government will help spur buyers back to the market. In its manifesto, Labour made the ambitious pledge to build 1.5 million homes, which could go some way to addressing the UK’s housing crisis. Such an increase in housing supply could improve the prospect of homeownership for young people, but in order to do so it will be imperative that the party follows through on its pledge.
“Such ambitious housing targets have historically been challenging to meet, and this is likely to be no different. Building 1.5 million homes within five years is an extremely tall order which will require significant resources, substantial investment and careful planning. Its success will also depend on the engagement and cooperation of local authorities, developers and the communities in which these new homes will reside.
“Though a significant challenge, if achieved, building 1.5 million new homes could make housing more accessible and affordable. Labour’s ‘freedom to buy’ scheme, on the other hand, may not have quite the same impact.
“The ‘freedom to buy’ scheme would see the current mortgage guarantee scheme made permanent. However, the scheme has achieved very little take up since launch as it does not tackle the fundamental issue of high property prices relative to average incomes. What's more, with house prices still at risk of fluctuating, negative equity could become a significant issue for those taking such high loan to value mortgages. Halifax reported the average UK home now costs £288,455, meaning a 95% mortgage supported by the guarantee scheme would require a £14,422.75 deposit. Having such a relatively low deposit amount would leave very little wiggle room in terms of house price changes before falling into negative equity.
“Prospective first time buyers and homeowners across the country have been crying out for help for some time now. Labour must follow through on its commitment to increase housing supply in the first instance, and it should explore alternative options to ensure that more people are supported in getting onto the housing ladder without needing to make potentially risky decisions when it comes to high loan to value mortgages.”
