The only thing that's certain is uncertainty

It’s nearly five years since the British public got its first glimpse of the Dave and Nick show on a sunny May afternoon in Downing Street’s rose garden. But the budding bromance of 2010 is a thing of the past, and the pals are back to being political rivals.

The question of whether voters are - or rather, feel - better off now than they were then will be decisive in this May’s election. Given that house prices play a huge role in the way people feel about their finances, a glance at how the property market has fared during this parliament should give some clues to the electoral calculus.

Back in 2010, at the start of Britain’s first coalition since the Second World War, there was understandable pessimism in the market.  Just a few years before, the US sub-prime mortgage crisis had rippled across the Atlantic and sparked a full-blown credit crunch in the UK.

House prices had taken a severe knock, buyer confidence was low and lenders were keeping their hands firmly in their pockets after being burnt by a rash of defaults. High LTV mortgages were nigh-on impossible to find.

The knock-on effect was that most first-time buyers were unable to even get a toehold on the housing ladder. And in turn many second and third time buyers were failing to move up another rung.

Scroll forward to today and the picture is very different in most of the country.

The average price of a residential property in England and Wales now stands at £290,000 – a rise of almost 11 per cent over the past five years. But it’s boom time once again for the capital – London prices have rocketed by more than 40 per cent since the last election, with residents having to fork out an average £465,872 to own a home, according to February’s Land Registry figures.

This growth is explained by a constellation of factors including falling unemployment, record low interest rates, real wage growth and an influx of wealthy foreign buyers snapping up London properties. Most fundamental of all has been the sustained shortage to housing, which has meant supply has never quite matched demand and has steadily pushed up prices.

The housing market – and mortgage lending - was particularly buoyant during the spring of last year. But by October, it looked like it had come off the boil after the introduction of tougher new rules under the Mortgage Market Review (MMR).

Yet there was some comfort though for borrowers in March. Mortgage approvals rose for a third straight month, reaching a six-month high, according to the Bank of England. While buyers are being more discerning, as rising demand butts up against the systemic shortage of property, we should expect prices to return to their upward trajectory after the election.

This election has been billed as the most unpredictable in a generation – and while it has so far failed to ignite public interest, the result will have a major impact on future housing policies. But with the result still impossible to predict, for now the only thing that’s certain is uncertainty.

By Jonathan Samuels, CEO of Dragonfly Property Finance