General election outcome won’t stop house price rises

The Tony Blair Institute for Global Change publishes new report showing that house prices will continue to rise, potentially by up to 26% by 2030.;
3D percentages and graph

The Tony Blair Institute for Global changes has analysed political manifestos, ahead of the election and concluded that house prices could rise by up to 26% by 2030.

The Tony Blair Institute for Global changes has analysed political manifestos, ahead of the election and concluded that house prices could rise by up to 26% by 2030.

Their predictions show the steepest rise under a Conservative government, at 26%, then Labour at 19% and 16% for the Liberal Democrats.

The Institute reported, in the summer, that their data showed that housing supply was not the answer to reducing house prices.

In the report, the Institute concluded that the cost of borrowing being so low and investments flows from abroad were drivers of house prices. They also found that housing had become less affordable for the following reasons:

  • Slow wage growth for young people
  • A lack of social housing
  • Housing benefit cuts

However, housing supply had been cited as the solution by all parties to reducing house prices.

The latest report observes that, despite this assertion, the Conservatives have actually reigned back their ambitions on growing England's housing stock, from 300,000 to ‘at least’ 200,000 per year – which is in line with existing volumes.

Labour have made no promises on housing supply, which is a shift from the crisis in supply they referred to, two years ago.

The Liberal Democrats are the one party seeking to increase housing supply, their ambition is to reach 300,000 new builds per year in England, where we currently average 217,000.

Messages on housing supply being the solution to rising house prices have been dialled back, and the Institute observes that this is likely to be because it has been realised that this is not, in fact, the answer.

How to tackle the housing crisis

The proposed routes to a solution for the housing crisis, presented in the report, are to “improve stability and fairness of private renters”,” ensure first-time buyers can afford to buy” and to increase the volume of social housing.

On whether party manifestos address these issues, the Institute had this to say:

“The parties’ proposals currently fall short on how rent rises in the private sector should be governed, with Labour proposing excessive intervention and the Conservatives not enough. On housing benefit the Conservatives and Liberal Democrat proposal fall short of addressing the pressing need to re-link housing benefits to the cost of housing – for reasons of poverty reduction and to halt rising homelessness. When it comes to promoting home ownership there is a pressing need to redesign Help to Buy if it is to achieve its aims and represent good use of taxpayers’ money.”

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.