The housing market in the UK has experienced numerous challenges of late, from disproportionate price rises caused by an imbalance between supply and demand and a subsequent lack of opportunity for aspiring first-time buyers.

However, it’s currently thought that two-thirds of households in the UK actually own the houses that they live in, with these entities and the housing market as a whole contributing significantly to economic growth.

More specifically, the housing market is closely linked to consumer spending, as when prices increase incrementally, home-owners become better off and more confident. They’re then more inclined to borrow against the value of their home, either to reinvest in the economy or supplement their private pension plans.

In this post, we’ll explore this further, while considering the latest news that business confidence in the UK is on the rise.

How is the Government Supporting the Property Market in the UK?

Given the fundamental role that the property market can play in driving economic growth on these shores, it should come as no surprise that the government is keen on incentivising home-ownership amongst its citizens.

This is evident through a range of different measures, including the 95% mortgage guarantee scheme.

In simple terms, this government-backed initiative helps both first-time buyers and even existing home-owners secure a mortgage with a nominal 5% deposit. The timing of this measure was also important, as it followed the revelation that approximately 80% of private renters are now actively saving for a deposit.

Then there’s the ongoing stamp duty holiday, which has been available in England and Northern Ireland and is projected to end on June 30th.

Back in July 2020, the level at which stamp duty was applied was increased from £125,000 to £500,000, enabling the vast majority of first-time buyers to minimise the cost of investing in real estate.

When combined, these measures have a cumulative effect on the fortunes of aspiring home-owners, while maximising the number of people who can invest in real estate and subsequently contribute more to the national economy.

As Housing Sentiment Rises, Business Confidence is also on the March

There’s no doubt that the property market is benefitting from improved sentiment and increased opportunity, with this being compounded by rising business confidence on these shores.

More specifically, the FTSE 100 was up earlier this week, reaching its highest level since prior to the 2016 referendum on EU membership.

According to Patrick Munnelly from Tickmill, this was triggered by the latest monthly Lloyds Business Barometer survey, which showed that business confidence increased for a fourth consecutive month in May (rising from 28% to 33% over the four-week period).

This represented a five-year high in terms of optimism in the UK economy, with businesses across an array of industries also benefiting from the gradual cessation of lockdown measures and the successful vaccine rollout.

This, coupled with improved access to housing and the potential impact that this may have on consumer spending, is indicative of a growing economy that can sustain itself over the coming months and years.

What’s more, it’s also likely to underpin increased investor confidence in the near-term, particularly in traditional stocks and equities based on these shores.