This is the first fall in the month of May for five years, as some sellers coming to market were forced to price more aggressively due to buyer uncertainty over the election outcome. As the new government aims to tackle long-term housing supply issues that contributed to a new national asking price record in April, Rightmove expect May’s price pause to give only short-term relief to some buyers, with the unexpected outcome of a majority government releasing the brakes on buyer confidence and activity.
The annual rate of increase is down to just 2.5%, the lowest since April 2013. With average wage rises beginning to outstrip Retail Price Index inflation, some buyers may be willing or able to pay higher prices given the more certain political outlook and enticingly cheap mortgage rates. However, sellers who think they have the upper hand due to the lack of property for sale should be aware that a surge of new competition could be on the way, giving buyers some extra negotiating power. In the three months after the May 2010 election there was a 17% jump in the number of properties coming to market compared to the previous quarter. With a majority government in power and record spring traffic on Rightmove, early indications from estate agents suggest that the next quarter could see another surge in property coming to market.
Miles Shipside, Rightmove director and housing market analyst, commented:
“Whilst activity was buoyant in early spring with demand for suitable housing outstripping the supply of property for sale in much of the country, it seems that pre-election jitters finally came home to roost in the final weeks of electioneering, with the average price of property coming to market dropping at this time of year for the first time in five years. This is an election-driven price stall which gives some buyers only short-term relief from the back-drop of a long-term housing shortage, and many estate agents are now reporting a resurgence in interest following the surprise election result. Election uncertainty and particularly the threats of financial penalties to landlords and those with properties valued at over £2 million put a brake on the market, and their removal gives a reason for a rebound in activity and prices."
Miles added:
“The underlying supply/demand imbalance has meant the election uncertainty has not had a negative price outcome in seven out of ten regions in the country. However, having been faced with an all-time asking price high in April of £286,133 nationally, any drop is welcome to those at the upper end of the stretched affordability curve.
“Buyers should note that there is often a surge of property supply after an election, as those who have held off coming to market decide to take the plunge. Many potential sellers may have held back expecting a period of hung-parliament uncertainty, but they could now decide to catch the late spring market. In a traditional tight-stock market an increase in supply of available property and greater competition among sellers to attract buyers may moderate their price expectations and make them more open to an offer. The previous election saw jumps in new seller numbers in all regions of the country, with London and Wales leading the way with over 20% more properties coming to market. There may be a window for buyers to act now in this late spring market before prices rise in the next few months.”
Melfyn Williams of Williams & Goodwin in North Wales said:
“Since the election we’ve had a number of our offices seeing more potential seller enquiries. While the market has picked up in North Wales and the top end of the market has started to move, a look back at the past year does show about a 10-15% decrease in instructions. So, while it’s still early days, the signs are pointing to an increase in property coming to market and more choice for buyers over the next few months. However, any potential sellers should be cautious about getting swept up in the post-election confidence and allowing their homes to be over-valued, as they still need to be realistically priced from the outset to have the chance of selling within the time frame they want.”
Roger Wilkinson of Wilkinson Grant & Co. in Exeter added:
“For owners and buyers of £2Million-plus properties, we are pleased that the spectre of a mansion tax and increase in income tax has been avoided – it may have seemed, to some, that wealthy homeowners were an obvious target but the prospect of its introduction undoubtedly caused many potential sellers and buyers to “wait and see”. But it’s not just wealthy homeowners who can count their blessings - the post–election “feel-good factor” will have a profound effect across the whole spectrum of the local property market - especially in the coming months - as we are already seeing a marked increase in out-of-area, local and regional buyer enquiries – not only in the higher price bands but across all price ranges.”
