House prices rose by 4.1% in the year to March – the slowest since October 2013. In fact, prices fell by 0.6% between February and March 2017, representing the sharpest fall since May 2011.

Samuel Tombs, chief economist at research company Pantheon Macroeconomics, noted that “the housing market is now in its softest patch for several years”.

The slowdown in house prices has been most prevalent in southern England, where three years of steep rises have hit the buffers at a time of tougher mortgage rules, stagnant wages and uncertainty over Brexit.

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As a result of this outlook, commentators are declaring that house prices are now seriously misaligned with average annual earnings; to the point that first-time buyers are finding it almost impossible to get on the ladder. This outlook comes despite competitive mortgage rates and a significant rise in parental help. 

Indeed, potential buyers are having to think long and hard before making any large purchases, especially after a slowdown in wage growth and inflation hitting 2.9% in May. 

According to property market analysts Hometrack, the problem is most acute in London, where the average cost of a home is “more than 14 times average earnings”. With the Royal Institution of Chartered Surveyors recently declaring an “acute shortage of stock” underpinning current prices, it seems unlikely that the situation will drastically improve in the short term.

News of a snap election further dampened the property market in April, before becoming further unnerved once the anticipated Conservative majority failed to emerge. As Russell Quirk, founder and CEO at eMoov.co.uk, remarked: “It is likely that the unpredictable swings in house price growth seen over the last few months will now persist for a while longer.”

Quirk also commented that transactional volumes in the property market had been “somewhat anaesthetised” following the election result. To resolve the issue, he stated that the industry requires something more “politically and economically decisive”.

A glut in supply can undoubtedly explain part of the problem. As noted by many observers earlier in the year, the average time taken to sell a house is now nearly 10 months. This has been compounded by changes to stamp duty land tax on second homes. 

April’s figures showed a slight improvement, however, with house prices growing by 5.6% in the year to April. 

As the new government continues to negotiate its delicate position within parliament – along with its immediate policy priorities – property professionals will have to wait a little longer before stable growth returns to the market.

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