This year’s general election – which was called one of the hardest to predict in decades – has now been and gone. However, some things that were expected have not quite proceeded as forecast – particularly where property is concerned.
Specifically, the property market was expected to be restrained as the election approached, due to the uncertainty about the direction things would take under the new parliament. Instead, however, prices grew by 1% between March and April – the biggest gain seen in any month since June last year.
This figure comes from data recently released by lender Nationwide, shows a 1% increase in house prices to settle at an average of £193,048. The last time such an increase was seen, last June, it was fuelled by a significant spike in sales which largely took place in the South East, and most particularly in London.
It’s not accurate to say that the general election did nothing to hold back the market, as its influence was not confined to just the month beforehand. For the past eight months, mainstream property activity has slowed and the luxury market has remained pretty much frozen. Nonetheless, as the election grew imminent and uncertainty was arguably at its most potent, the market managed to shrug off concerns and deliver the biggest monthly growth figure in some time.
According to Nationwide, the annual house price growth rate is also finally heading upwards, despite months of being held back by election fears. The annual growth rate was 11.1% last August, but fell to only 9.4% in September and has continued falling in the months since. Between March and April, however, the rate changed direction and showed a modest but definite increase between March and April. It rose from 5.1% to 5.2%, and though month-by-month fluctuations are still expected the market as a whole is believed to be set to keep heading in a generally upward direction.
The election has not been the only factor slowing activity in recent months. High prices, stricter affordability checks for mortgages, and the slowing of a previous surge of demand all helped to reduce the pace of the market in the last half of 2014. While a change of direction is not unwelcome at present, it has been something of a surprise given the market’s recent background.
According to chief economist at Nationwide Robert Gardner, "The pick-up in price growth has occurred even though the pace of activity in the housing market has remained fairly subdued in recent months. Indeed, the number of mortgage approvals is still well below its long run average."
Gardner did, however, recognize that the strong state of the economy made the slow housing market somewhat anomalous. The coming months, he said, could potentially see continued growth thanks to low mortgage rates and a fall in unemployment.