Election uncertainty slowing property demand

The latest monthly figures from estate agents seems to suggest that property hunters throughout the U.K are holding out for the result of Thursday’s general election before pressing on with their search.

Demand

A report from the National Association of Estate Agents (NAEA) revealed that 63% of its members believe that demand for property is at its lowest point since last year. 343 would-be buyers are currently registered on average per NAEA branch, as opposed to 406 in September 2014.[1]

Findings from the report also indicated that only 22% of house sales in March were made to first-time purchasers. This represented the lowest figure since July 2014, and was also down by a substantial 30% on February.[2]

Election indecision

There is also concern amongst NAEA members that demand is continuing to far exceed supply for first-time buyers. Housing policy is one of the biggest election battles, with the report showing that 48% of NAEA agents back the Tories’ pledge to build 200,000 purpose starter homes. However, just 6% support Labour’s promise to increase house-building numbers to 200,00 per year by 2020. [3]

31% do not think that any of the policies put forwards will be sufficient in solving the housing problem.[4]

Mark Hayward, NAEA managing director, said that, ‘an event as monumental as a general election,’ would always have, ‘an impact on the property market.’ However, Hayward believes that, ‘what makes this election so interesting is that no one knows what the result will be.’[5]

Hayward thinks that, ‘with housing featuring so prominently in all three main parties’ manifestos, buyers in particular are holding off to see what will happen.’ He went on to state that the, ‘outcome of the election will impact first, second, third and last-time buyers.’[6]

Election uncertainty slowing property demand

Rise

Interestingly, while demand was down to 343 house hunters per branch during March, supply went up on average from 43 to 48 homes. This is due to houses staying on the market for an increased period, due to nervous property hunters.

With demand far exceeding supply, a slight fall in demand will not affect overall sales. In fact, March saw an increase of the average amount of sales secured per branch, with ten sales as opposed to eight in February.[7]

Mr Hayward commented that despite the slight increase in supply during March, ‘it is not an ongoing trend or a big enough jump to fill the gap for demand.’[8]

Not enough

Despite saying that it is, ‘encouraging to see all parties actively proposing plans to regulate supply and demand,’ Hayward believes that, ‘the policies in place are unlikely to be enough to rectify the crippling situation we’re in.’ Explaining his comments, Hayward said that, ‘it’s all very well proposing to build 200,000 houses, but planning law, lack of infrastructure and available labour can make this process so lengthy that it may be ten or twenty years until we see this, by which time demand will be greater.’[9]

Hayward concluded by saying that the market will rise again at a, ‘rapid rate,’ following the election, and stressed that it is, ‘more important than ever that the party elected focuses on increasing the supply of homes.’[10]

[1-10] http://www.propertywire.com/news/europe/estate-agents-buyer-concerns-2015050110458.html