The UK’s prospective home buyers and sellers are in ‘wait-and-see’ mode as house prices held steady in May amid uncertainty about the general election and interest rates outlook, new figures show.
But experts predicted a surge in demand could be on the way soon, once the general election is out of the way and interest rates start falling.
The latest House Price Index from the country’s biggest mortgage lender Halifax shows that the average house price across the UK ticked down by just £170 in May. A number of estate agents reported quieter activity in what is traditionally a busy month for property moves.
The average house price across the UK came to £288,688, close to flat month-on-month and up 1.5% from last May. In London, prices were close to flat year-on-year, with the average home costing £536,821. With average wages growing by 6% year-on-year, according to the ONS, the figures suggest properties are getting more affordable.
Labour appears set to make housing affordability a major part of its manifesto, having promised to deliver 1.5 million new homes. Last night, Sir Keir Starmer announced that he would make the low-deposit mortgage guarantee deal permanent.
Jonathan Hopper, CEO of Garrington Property Finders, said: “While both prices and activity have been meandering, it’s clear there is plenty of pent-up demand from buyers primed and ready to go once the election uncertainty is over.”
In 2019, the property sector reported a “Boris bounce” in house prices soon after Boris Johnson and the Conservative Party secured a landslide general election victory. With Labour holding a comfortable lead in the polls, homeowners will hope for a “Starmer spurt”.
The future path of house prices will likely depend more on what goes on in Threadneedle Street than in Downing Street, however.
Yesterday’s decision by the European Central Bank to cut interest rates in the Eurozone added to the pressure on the Bank of England to bring its base rate down from its current 14-year high of 5.25%. However, it’s unlikely that the Bank’s Monetary Policy Committee will move before the election. City traders have circled the Bank’s August and September meetings as the two most likely dates for a cut. Mortgage rates have edged up in recent weeks but are much less volatile than in 2023, with the average five-year fixed rate deal sitting at 5.51% today according to Moneyfacts.
Halifax head of mortgages Amanda Bryden said: “A period of relative stability in both house prices and interest rates should give a degree of confidence to both buyers and sellers.”
Hopper added: ““The plodding equilibrium is unlikely to last. With both the economy and consumer confidence growing again and thousands of would-be buyers primed and ready to jump back into the market when interest rates start coming down, all bets are on for a strong summer rebound if the next few months bring cheaper mortgages and a return to political stability.”
