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Election may have chilled UK housing market, Rics says

Election may have chilled UK housing market, Rics says

The UK’s general election may have had a chilling effect on the housing market, according to the Royal Institution of Chartered Surveyors.

The body’s latest residential market survey found enquiries from new buyers, new instructions from those wanting to sell and agreed sales all declined during May.

Meanwhile house price growth “lost momentum” and is predicted to slow further in the next few months.

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Simon Rubinsohn, chief economist at Rics, said: “The latest survey suggests that uncertainty related to the general election may have contributed to what appears to have been a disappointing level of transactions in the housing market over the spring.

“Perhaps the most ominous signal emanating from the data released today is that contributors still expect house prices to increase at a faster pace than wages over the medium term despite the difficulty many first-time buyers are clearly having in taking their first steps onto the property ladder.

“The increasingly tight second-hand market remains a cause for concern with the Rics series tracking new instructions to agents recording its 15th successive negative reading.

“It is hard to see this as anything other a major obstacle to the efficient functioning of the housing market.”

Agreed sales declined for a second month running as the survey saw 8 per cent more respondents seeing a fall in agreed sales.

Lack of supply continues to support prices but the headline price growth indicator moved from +22 per cent to +17 per cent in May, the softest reading since August 2016, and prices continued to slip in central London.

Near-term price expectations also slipped to -1 per cent from +5 per cent in April, the third straight report in which this indicator has softened.

London showed sentiment more negative to all other parts of the UK but near-term expectations in all regions had slipped.

damian.fantato@ft.com