The majority of buyers and sellers in the prime housing market will not be deterred by the upcoming general election, according to property firm Savills.
A survey of 1,200 prime home movers revealed that for the vast majority (79%), an upcoming general election doesn’t change their plans to move, while 13% said that they were even more committed to do so in the next 12 months. Just 8% said that they are less committed to moving as a result.
Lack of concern was most evident among downsizers and those looking to relocate, while investors and second-home buyers are more likely to wait and see.
Commitment to move strongest since the mini housing market boom
More broadly, commitment to move within the next six months has increased by a net balance of +32% – meaning that commitment is now at its highest level in over two years. Although the uplift in confidence is most significant among first-time buyers, and upsizers, whose activity has been more subdued over the past year.
Savills says: “With mortgage markets steadily improving, the outlook for the housing market has certainly improved and has entered the first stages of recovery. For the first time since the mini-budget, the survey signalled stronger confidence among typically more leveraged buyers, pointing to a market that will be less heavily dominated by cash and equity-rich buyers.
“Despite a general election nearing, the short odds on a change in government mean that political change is already largely priced into the market, and for the most part, buyers will remain undeterred about pressing ahead with moving decisions. However, there will be more caution at the top end of the market which is typically much more discretionary.
“Buyers here are more likely to play a waiting game, and price sensitivity may remain in the run-up to the election.”
First signs of budgets increasing
With the first rate cut in sight, prime movers have also started to increase budgets – with two times as many reporting that they have increased their budgets compared to the summer (15% vs 8% in July).
An uplift in budgets also coincides with a shift in financing, with more reversing back to fixed-rate mortgages. Today, almost half (44%) say that they’d opt for a two-year fixed mortgage (vs 31% in January). While only half as many will be opting for a variable mortgage compared with January (22% vs 11%).
Savills says: “As inflation has fallen the argument as to whether borrowers take a two or five-year fixed-rate mortgaged has moved in favour of short-term deals in anticipation that rates will fall further. This also gives people who can get a hold of mortgage finance more confidence to stretch budgets, in the hope that payments will reduce after the initial fixed period.”
Pandemic trends unwind
When it comes to buyer priorities, the vast majority agree that the size (65%) and number of rooms in a home is the most important attributes to consider when purchasing a new home (54%). This has increased since this question was asked two years ago (52% and 45%). While pandemic trends including garden and outdoor space, and a separate space to work from home have slipped down buyer wish lists.
Just a third ranked access to outdoor space as a top priority (31%), compared with 42% in February 2022. While just 7% ranked a separate space to work from home high on their wish list.
“With fewer people working from home, pandemic drivers are beginning to unwind, with square footage and bedroom numbers more important for prime buyers, particularly for upsizers operating with more constrained budgets,” says Savills.
