House prices set to rise after unseasonable slump
The general election in May sparked uncertainty in the housing market. The result was a fall in the asking prices of homes for sale. The last time this was seen was before the general election of 2010.
Before the 2015 election, Labour made it clear that if they won, they would be levying an extra tax on homes valued at over £2 million. This caused a nervous market and a fall of 0.1% in asking prices.
The Conservative majority is set to drive prices higher over the coming months.
The Tory majority was unexpected and it has increased confidence in the housing market. It is predicted that the May house price slump will be temporary, with prices set to edge higher.
After the 2010 general election, the number of people selling their homes increased by 17 per cent in just three months. Estate agents are already reporting an increase in trade in the aftermath of the most recent election.
James Boyd is CEO for Conveyancing at Birchall Blackburn Law. He said:
“The brief respite in prices on the housing market masked the ongoing problem of a housing shortage that is set to continue. This is leading to higher prices, particularly in the aftermath of the election with both buyers and sellers in a stronger position to make decisions based on future policies.
“We are already seeing increased residential sales activity since the results were declared. The new government will need to find a way of making more homes available. Until this happens, house prices will remain high and first time buyers will increasingly be priced out of the market.”
The slump in the market this month is perhaps slightly misleading. Prices actually only decreased in three out of ten regions.
The price drop was most notable in London, where the mansion tax would have hit hard.
The city saw a drop in the average asking price of 2.3 per cent between April and May. This is expected to be reversed in the coming months with fears over the mansion tax allayed for the next electoral term.
The property search engine Rightmove has pointed out that political instability is not completely over. The prospect of a referendum on Europe could also have an effect on the housing market in the near future.
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