Market ‘on hold’ as election bites

The general election and ongoing political uncertainty have led to a month of stagnation in the housing marke and sales have continued to fall, according to the latest Royal Institution of Chartered Surveyors data.

As voters head to the polls today, the RICS said that its monthly residential market survey showed the market was “on hold, pending election results”.

The survey reported that 8% more estate agents witnessed a fall rather than an increase in sales over the past month. It was the third consecutive month of falling sales.

The news comes after an election campaign in which the two main parties have made contrasting pitches to the electorate. The Conservatives have promised to resolve Brexit while Labour has pledged massive investment in the NHS and public-sector pay and services.

The Conservatives have pledged to build just 200,000 homes per year – less than are being constructed at the moment – with a focus on home ownership and modern methods of construction. Labour has promised a £75bn programme to build 150,000 social and affordable homes a year by the end of the next parliament.

The RICS report also found that falling sales seem finally to be translating into declining prices, at least in London and the South-east. This is despite the  number of homes put up for sale also decreasing.

Simon Rubinsohn, RICS chief economist, said: “Whatever happens in the general election today, it is important that the new government provides reassurance both over the stewardship of the economy and the ongoing challenges around Brexit, which continues to be highlighted in a disproportionate number of remarks made by respondents to the RICS survey.”

Expectations for the future have improved, however, with a positive balance of 11% of agents expecting sales rates to pick up in the next three months, and a balance of 35% in the next year. Rubinsohn added: “Despite the inevitable near-term concerns, the feedback regarding the medium-term view of the market remains surprisingly sanguine, with the 12-month sales expectations indicator at its best level since the early part of 2017.”

Mark Sitch, senior partner at planning and design consultancy Barton Willmore, said the election was a choice between two very different visions of the housing market. “There is a consensus that the housing crisis must be taken seriously and that the primary response to it must be to simply build more houses. However, neither manifesto sufficiently details how these plans will be delivered.”

Sitch added that, despite Labour’s pledge to use public spending as a “silver bullet”, he was still concerned it would simply mean that “market failure would merely be followed by government failure”. And, while Conservative pledges around infrastructure were “encouraging”, he said that “their record on actually delivering homes has been mixed”.