A month after it was reported that demand for property in prime central London had flat lined, the election effect has now spread across the country as homes are taken off the market and buyers adopt a wait and see approach.
The bright spot in the latest house price data released by RICS is that property prices have been pushed rapidly upwards due to the shortage of supply. Even though buyer enquiries are said to have flatlined, figures show that this hasn’t affected prices with enough buyers still around to snap up properties that are available.
The current state of the UK property market begs the question, what would happen after the election?
There is the possibility that a party which captures the public imagination and promises a secure recovery along with wage rises and the promise of future prosperity will create the conditions for a property boom.
Of course all of this still depends on the commitment to clearing the huge deficit that still exists and is expected to be a dark cloud on the economic horizon for at least the next five years and possibly until another election is due.
The one area that has not only helped the UK weather economic adversity over the years has been the underlying strength of the housing market. The UK remains a well populated country with a limited supply of housing.
Successive governments have failed to build enough houses to satisfy demand and this has helped hold up prices and increased them dramatically in London and the South East.
The supply demand imbalance will continue in most areas of the country. According to the RICS UK Residential Survey 21% more surveyors reported a rise in house prices in March (up 6% on February). Even allowing for seasonal differences this increase is significant and means that at least some homeowners trapped in negative equity in parts of the North can feel more optimistic about future growth in the value of their property.
15% more surveyors are also expecting prices to increase over the next three months, which is good news even if the number is less than it was in March 2014.
Northern Ireland is currently the best country to look for house price growth prospects. Following a pronounced housing crash, Northern Ireland continues to outperform the rest of the UK and achieved the strongest growth in prices in March 2015.
It has already been reported that house prices increased by 14% in Ireland in the year to February 2015 and further strong increases are anticipated for the next 3 months.
Simon Rubinsohn, Chief Economist at RICS, said: “The boost that was given to the housing market by the Help to Buy scheme has begun to dissipate and activity levels have slipped back.
Even more worrying are the tentative signs that price momentum could be set to pick-up once again as the supply of stock to the market continues to fall. Anecdotal evidence does suggest that election uncertainty may be having some impact on the market, but underlying the trends visible in the latest survey is a very real housing crisis which will urgently need to be addressed by the next government.
It is significant that price expectations nationally are accelerating both at the three and twelve month time horizons and at the latter they are at their highest level since the spring of last year.”
Jeremy Blackburn, Head of Policy, said: “The Conservative Party’s proposal this week to extend Right-To-Buy will help relatively small numbers of tenants to move into home ownership, without doing anything to solve the shortage in overall housing supply.
Aspirational home ownership is at the core of our economy but we must ensure that we have a future stock across all tenures and particularly for those on lower incomes.
The proposed brownfield fund is a welcome means to unlocking land supply for more houses to be built in the next Parliament however, it still falls short of a comprehensive housing strategy.”
Posted on: April 22, 2015