Despite the recent slowdown, house prices are still expected to increase at a faster pace than wages over the medium term.
Residential property prices increased at their lowest rate of growth in nine months in May, as jitters ahead of the general election add to a lull in the property market, according to a new survey.
Based on feedback from surveyors, the latest poll from the Royal Institution of Chartered Surveyors (RICS) shows that its monthly property price balance fell to +17 in May from April’s +22.
A RICS spokesperson said: “Price growth appears to have lost momentum in the latest report and expectations suggest a further cooling is likely in the near term.
“The general election is again commonly cited as a factor hindering activity, causing some hesitancy from both buyers and vendors.”
Separate property price data also shows that home values are cooling across Britain, with the latest Nationwide figures revealing that the average price of a home fell by 0.2% between April and May, to £208,711, while Halifax said that property price inflation dropped to 3.3% in May, down from 3.8% in the year to April.
Growing economic and political uncertainty, in addition to growing inflation, is having an adverse impact on buyer confidence and squeezing affordability.
But the RICS poll also found that fewer properties are coming on to the market, adding to the growing supply-demand imbalance, which suggests that home prices may rise in the coming months.
In fact, RICS said the overwhelming majority of its members expected property prices to increase across Britain as a whole during the next year, and forecasted that the average price of a home in this country would rise by an average of 3.5% per annum over the next five years.
“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,” said RICS chief economist Simon Rubinsohn.
The housing market has been flatlining for a while now, particularly in London and the South East, arguably with a lack of affordable housing for first-time buyers being the main catalyst for this, according to Richard Sexton, director at e.surv.
He commented: “The government has to make sure that housing is a top priority. The UK’s housing stock has been stagnant for too long and if more affordable homes aren’t built, things will only get worse.
“We urge the government to start working closely with the industry to give more people the opportunity to become homeowners.”