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Pre-election jitters blamed for May house price fall

Pre-election jitters blamed for May house price fall

This month has seen an unseasonal drop in new seller asking prices, down by 0.1 per cent or £242, compared to last May’s 2.1 per cent increase, new data has revealed.

Rightmove’s monthly house price index, published today (1 May) pointed out that this was the first fall in May since the last general election in 2010, adding that with a majority government some of the brakes will now be now off for prospective buyers and sellers:

New seller numbers jumped 17 per cent after the 2010 general election result and the property portal predicted that there will be an even bigger surge now, with the removal of the ‘mansion tax’ threat stimulating the prime market particularly.

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However, price rise momentum may be tempered by stricter lending criteria and the forthcoming uncertainty of a Euro-referendum, according to Rightmove.

Miles Shipside, Rightmove’s director and housing market analyst, put the slight fall in May down to pre-election jitters.

He said: “Election uncertainty and particularly the threats of financial penalties to landlords and those with properties valued at over £2m put a brake on the market, and their removal gives a reason for a rebound in activity and prices.”

The new government faces the long-term challenge of delivering on their election promise to build 275,000 new affordable homes in the term of the current parliament though, Mr Shipside added.

According to other metrics, the lack of property supply is continuing to force house prices up. Data from Halifax’s monthly house price index, published earlier this month, revealed that the average property price is now just shy of £200,000, growing by 8.5 per cent in the 12 months to April.

Mr Shipside said: “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.”

The annual rate of house price increase is down to just 2.5 per cent, the lowest since April 2013, according to Rightmove.

With average wage rises beginning to outstrip the retail price index measure of inflation, some buyers may be willing or able to pay higher prices, given the more certain political outlook and cheap mortgage rates, noted Rightmove.

Mr Shipside said that 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.

“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 per cent more properties coming to market.”

peter.walker@ft.com