The shock general election result will lead to greater uncertainty in the housing market and kick decision-making “into the long grass”, experts have warned.
Following the failure of the Conservative Party to secure an overall majority there are fears that the recent lull in the housing market is set to continue.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “A hung parliament will result in an extended period of uncertainty with decision-making kicked into the long grass.
“Theresa May is correct – we need a period of stability as that will quash uncertainty which is bad for the housing market – but it is not clear at the moment whether she can deliver it. Stability is crucial in enabling people to make big decisions such as buying and selling property.”
Figures from Nationwide show that house prices fell for the third consecutive month in May, the first time this has happened since the financial crisis was at its peak in 2009.
Experts have blamed the dip on uncertainty surrounding the general election and Brexit as buyers adopt a “wait and see approach”.
Benson Hersch, chief executive officer of the Association of Short-Term Lenders, said: “As usual, markets hate uncertainty and the result appears to have made everything even more uncertain. This will not help the property nor the economy as a whole.”
However, John Phillips at Just Mortgages and Spicerhaart, said he was hopeful that the market would soon pick up.
He said: “Some buyers and sellers have recently adopted the wait and see approach and it is likely that the market will quieten down again next week while things start to settle down.
“We must also remember that housing demand is still outstripping supply, people still want to own their own homes and lenders are still cutting interest rates. Ultimately it is these strong fundamentals that will continue to underpin the market.”
Housing minister loses seat
In what was a disappointing night for the Conservative Party, Housing Minister Gavin Barwell also lost his Croydon Central seat to Labour’s Sarah Jones by 6,652 votes.
This could potentially throw the government’s plans to implement its long-awaited housing white paper into disarray.
Nick Leeming, Jackson-Stops & Staff chairman, said the priority now must be for politicians to provide reassurance by forming a government as quickly as possible.
“The housing market has already been the recipient of doom and gloom in the news this week and certainty is now required to inject confidence and increase fluidity across all levels.
“With Gavin Barwell gone, it will be interesting to see what happens to the long awaited housing white paper that disappeared from the scene since its publication in February.
“Regardless of how the government is formed, it is clear from each of the main political parties’ manifestos that housing is a priority and so a clear strategy must be put in place to tackle the problems of supply, high transaction costs and affordability.”
Affordable housing
The government pledged to build more affordable homes and fix the “broken housing market” in its housing white paper.
The new housing strategy for England also includes giving councils powers to pressurise developers to start building on land they own as well as improving affordability and protections for renters and home buyers.
Hersch said that despite the “stormy days” ahead, it was vital that affordable housing remained a key priority going forward.
“The country desperately needs new homes. Therefore, regardless of how the government is formed, affordable housing must not take a back seat. The government must have a clear and realistic strategy to tackle the housing crisis while working with the sector to get Britain building.”
Leaf said: “If there is one message that has come out of this election, it is that the young have voted overwhelmingly for change.
“Politicians will have to consider the needs of the young more than they have in the past which could mean more help for first-time buyers, perhaps extending Help to Buy so that it covers older properties as well as new-build, dealing with affordability issues and more help on stamp duty.
“One thing all the parties agree on is that we need more housing so it has to be a priority for whichever formal or informal coalition is created.”
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