Housing markets like stability. The past ten years, in which time we have burnt through seven prime ministers, have provided little of this.
A change of leadership will almost definitely mean the air of uncertainty, that has been hanging over the housing market since late 2022, remains in situ over the remainder of 2026.
The newspapers are already full of speculation about the economic direction that will be taken by a new prime minister. It will take time for this to become clear.
Though the outcome of a change in leadership may appear a formality, due process still needs to be followed and key ministerial positions also need to be filled, most notably the Chancellor of the Exchequer.
Finding someone with the economic credibility to calm the bond markets and prevent a further bout of disruption in the mortgage markets presents the first challenge. Finding an individual who also has the same political objectives as the person appointing them presents the second. And as the experience of 2022 reminds us, time is then needed to formulate an economic and fiscal plan before a first budget is delivered (not least given the need for the OBR to work through its implications).
So even if, as current circumstances suggest, the geopolitical environment looks more settled in the Autumn, the political situation closer to home is likely to give buyers a reason to remain cautious sometime after the boys of summer have gone.
This is especially likely at the top end of the market, with the thorny issue of property taxation once more raising its head. Whispers of replacing stamp duty and council tax with an annual property levy have returned. Though little more than conjecture, this has the potential to cause owners and would-be owners of high value homes to sit on their hands.
The difficulties in undertaking such widespread reform were laid bare in the Autumn of last year. The pros and cons of an array of different options were given a damn good trashing in the run to what appears to have been Rachel Reeves’s last budget.
The result was a High Value Council Tax Surcharge, the foundations for which are being laid as we speak, for introduction in April 2028. That being the case, ruling out further reform – that would be devilishly difficult to deliver in the lifetime of this parliament in any case - would go a long way.
In its absence, it continues to look like a housing market recovery – whenever it materialises - will be bottom up rather than top down.
In a similar vein, the heavy lifting has already been done in the reform of the private rented sector, with the Renters Rights Act now in place. That, together with a building body of evidence of what this means in reality, should reduce the risk of further intervention in that market when there are bigger fish to fry.
What then of housebuilding and the bold ambitions to deliver 1.5 million new homes over the course of this parliament that was a prominent part of Keir Starmer’s 2024 manifesto?
Our recent analysis suggests that, while significant progress has been made in planning policy, this alone is not enough. Such reforms were always going to take time to gain traction. A period of rampant build cost inflation and low house price growth has created viability issues that make a meaningful increase in housing delivery even more difficult. The best case outcome would be a recognition of this, with a fresh series of measures to stimulate private and public housebuilding through the current market headwinds to allow the government to get a return on the policy reform of the past 18 months.
Early signs are that Andy Burnham would prioritise the delivery of social housing with a pledge of additional funding for that purpose.
The worst case would see a new prime minister distance themselves from these ambitions, prioritising other policy initiatives for short term wins. Who gets the gig of Secretary of State for Housing, Communities and Local Government should give an early clue.
It is clear, then, that a new prime minister will have a lot to think about when it comes to housing.
Against this backdrop, whoever takes up the mantle at number 10 would do well to remember that stability in the mortgage markets is crucial to a functioning housing market, long-term, consistent and balanced housing policy is key to supporting development and investment activity and certainty in the tax environment reduces the risk of distortion and disruption.
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