UK housing market slows further amid election jitters

The general election has exacerbated a slowdown in buying and selling activity in the UK housing market, a fresh survey has suggested.

Some 17% more chartered surveyors reported higher house prices in May, down from 22% in April, the Royal Institution of Chartered Surveyors (Rics) said.

That represents the lowest reading in the headline price growth index since August last year.

New buyer enquiries and newly agreed sales both declined during the month, with some vendors adopting a "wait and see" approach ahead of the election.

Opinion polls throughout the election campaign have put Prime Minister Theresa May's Conservative Party ahead, with the Tories' lead over Labour anywhere between one and 12 points.

"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," Rics chief economist Simon Rubinsohn said.

Some 25% more surveyors reported a decline in fresh listings in May – the most negative reading since July 2016. The average number of unsold homes on estate agents' books was just 43.

The national sales gauge improved slightly to -8% in May from -9% in the previous month. Surveyors expect house prices to drop further over the next three months before recovering through the rest of the year.

Rubinsohn added: "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."

Data released by Halifax on 7 June showed UK house prices rose 3.3% year-on-year in May, following a 3.8% increase in April.