Saturday, 23 May 2015 00:00

May asking prices fall for the first time in five years

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Prime Minister David Cameron at a property in his Oxfordshire constituency Photo: AFP/Getty Images Prime Minister David Cameron at a property in his Oxfordshire constituency Photo: AFP/Getty Images

Asking prices fall for first time since 2010, but Conservatives' majority win is set to unleash the property market.

The unexpected Conservative majority win earlier this month could jump start the housing market, which suffered an unseasonable slump in May not seen since the last general election five years ago.

The average asking price for a new property on the market dropped by 0.1pc in May from the previous month, compared to a rise of 2.1pc in the same period last year, marking the first May decline since the general election in 2010.

An average of £242 was knocked off asking prices amid buyers’ uncertainty over the result of the election, in particular the threats of the Labour party’s mansion tax on homes worth more than £2m and stricter controls on landlords.

 However, the unexpected outcome of a majority Conservative government has “released the brakes on buyer confidence and activity” and is likely to nudge property prices higher in the coming months, according to Rightmove, the UK's largest property search website.

“It seems that pre-election jitters finally came home to roost in the final weeks of electioneering,” said Rightmove director Miles Shipside. “This is an election-driven price stall which gives some buyers only short-term relief from the backdrop of a long-term housing shortage, and many estate agents are now reporting a resurgence in interest following the surprise election result.”

The number of new sellers bringing properties to market surged 17pc in the three months following the general election in 2010, jumping by more than 20pc in London and Wales, and Rightmove expects to see a similar bout of activity this time.

“Now the months of uncertainty are finally over, we are already witnessing confidence returning to the market with buyers and sellers in a more informed position to make the decisions they were putting off,” said Andrew Weir of Foxtons in London. “Whilst it’s still far too early to put any numbers on it, we expect to see more stock coming back to the market and increased buyer confidence especially with interest rates still as low as they are.”

 However, Rightmove warned that the cloud of political uncertainty has not completely cleared, pointing to the upcoming EU membership referendum, the possibility of stricter lending criteria and a rise in interest rates.

David Cameron’s new government must also tackle the shortage of supply in the housing market, which has been driving property prices higher across the country. This ongoing demand meant that, despite the overall pre-election slump in May, asking prices only dropped in three out of 10 regions: the North East, Yorkshire and the Humber, and London.

In the capital, where the sting of the mansion tax would have been most acute, the average price dropped 2.3pc from £594,585 in April to £581,074 in May.

Although the average national asking price rose by a yearly 4.7pc to a record high of £286,133 in April, the annual rate of increase slowed to 2.5pc this month, its lowest in two years.

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