The new government has pledged to build 1.5 million homes over the next five years to alleviate the pressure of rising house prices. This policy has garnered substantial support from voters, as insufficient supply is one of the primary reasons for the increase in house prices. However, despite the government's ambitious plans, the construction of housing is highly influenced by economic cycles, posing several challenges for implementation.

To achieve the housing targets, the government plans to relax planning approval restrictions, especially in green belt areas. This policy change aims to accelerate the construction of new homes. Recent data shows that the number of new housing starts in the UK decreased by 22% compared to the previous year, indicating the urgent need for housing reform. The government hopes to quickly increase housing supply by prioritizing the development of brownfield and green belt land applications, easing market tensions.

Addressing the issue of young people's weak home-buying ability, the government proposed making the mortgage guarantee scheme permanent. This strategy allows buyers to purchase properties with only a 5% down payment, significantly lowering the threshold for homeownership. This measure is expected to greatly boost the property market, attracting more first-time buyers.

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Historically, under Tony Blair's leadership from 1997 to 2010, the Labour Party achieved significant house price increases, demonstrating Labour's regulatory capability in the property market. However, interest rates are the key factor affecting the property market. Currently, high mortgage rates limit buyers' budgets, suppressing market activity. Analysts predict that high rates will continue to impact house prices at least until 2024.

After World War II, the UK faced a significant housing shortage, prompting government intervention, leading to the creation of both private and affordable housing markets. Currently, about 80% of UK residents live in privately-owned homes, while around 20% reside in affordable housing. Although the private housing market shows some stability, it is still affected by economic cycles.

New housing supply is highly concentrated in the hands of a few large builders. The three largest builders account for 25% of new homes, and the top eleven provide 40% of the supply. These large developers' projects range from greenfield sites to urban redevelopment areas, with a wide geographic distribution. However, this high concentration has led to a sharp decline in the market share of small and medium-sized builders, from 39% in 1988 to 10% in 2020. The concentration of supply, combined with inflation and limited land resources, has driven house prices up continually. Despite the shocks from the 2008 financial crisis and the rapid interest rate hikes in 2023, UK house prices have still increased fivefold over the past 30 years.

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Affordable housing was once a key measure to address housing issues in the UK, but over time, government focus on this area has waned. Currently, the shortage of affordable housing in the UK is becoming more severe, with a cumulative shortfall of 4.3 million homes. In 2022, the number of affordable homes decreased by 11,700 due to demolition, sales, and conversions, while only 11,400 new affordable homes were built. Political divisions, particularly between the two major parties, have made it difficult to implement unified policies, leading to many plans being shelved.

The primary beneficiaries of affordable housing are economically disadvantaged groups who find it difficult to afford private homes in a market with rising prices. With the shortage of affordable housing, these individuals not only struggle to purchase property but also face rising rental pressures.

Although Labour's policies appear radical, their implementation is challenging and unlikely to show immediate results. However, this presents an opportunity for investors. Despite short-term fluctuations, the long-term appreciation potential of the UK property market remains significant. Investing in UK property, especially during a period when policies are not yet fully in place, could be a wise choice.