Although the housing market has noticeably cooled so far this year, with price growth running at about a third of the double-digit increases seen in the spring of 2016, the latest survey by the Royal Institution of Chartered Surveyors (RICS) showed its members were confident of continuing growth.RICS pointed out that this would mean increases running ahead of expected average pay rises, making it increasingly difficult for first-time buyers to get on the housing ladder.However, the RICS survey of members indicated that house prices rose in May at their slowest pace since last August with fewer houses coming on to the market, apparently because of uncertainty generated by the prospect of Thursday’s general election.“Price growth appears to have lost momentum in the latest report and expectations suggest a further cooling is likely in the near term. The general election is again commonly cited as a factor hindering activity, causing some hesitancy from both buyers and vendors,” reported RICS.

Prices fall for third consecutive month

The survey came on the heels of a Nationwide Building Society report showing that, in May, prices fell for a third month in a row – the first time this has happened since 2009 – and publication of the Halifax index suggesting that annual house price growth had fallen to a four-year low of 3.3 per cent.But RICS said the overwhelming majority of its members expected prices to rise across the country over the coming year, with a 3.5 per cent annual growth rate over the next five years.Simon Rubinsohn, RICS chief economist, said, “Although 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 fifteenth successive negative reading. It is hard to see this as anything other a major obstacle to the efficient functioning of the housing market.”

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“No cause for concern”

Brian Murphy, head of lending at the Mortgage Advice Bureau, commented, “What’s apparent from the report is that house price growth is still in positive territory with ‘modest gains’ in most areas – that’s hardly cause for concern and isn’t the same as the market seeing key indicators for a fall or sharp correction.“The continuing lack of supply isn’t a surprise, with the current political goings on deterring those ‘discretionary sellers’ who normally add a valuable additional number of available properties to the spring market, inevitably providing buyers with more choice.“Given the context of recent political developments and the ‘double whammy’ of Article 50 being triggered followed by a snap election being called, there will always be the ‘wait and see’ contingent – both in terms of buyers and sellers – and it might be reasonable to suggest that, in line with activity that has been observed in other election years, we could well see a pick-up in housing market activity post-9 June.“It’s probably reasonable to suggest then that, when all is said and done, surveyors up and down the UK are observing on the ground what many others in the industry suspect; those who need to move are doing so, and those who are seriously considering it are just ‘holding off’ for a few weeks and then, regardless of the election result, are likely to get on with it. Whilst that may mean the market has been slightly more subdued last month, there’s nothing to suggest that this is anything more than the normal pattern for the housing market around an election, and that consumer confidence in UK property remains undeterred.”The RICS survey showed that property stock levels at estate agents remained at all-time lows, with an average of only 43 unsold homes on the books. It said a “sheer lack of supply continues to support prices for the time being”.However, a net balance of 26 per cent of surveyors expected sales to increase over the coming 12 months, with RICS members in SW England and Wales most optimistic over future prospects.For related news and features, visit our Residential Property section.Access hundreds of global services and suppliers in our Online Directory  Get access to our free Global Mobility Toolkit

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