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First-time Buyer

General election causes slowdown in house buying and selling

Samantha Partington
Written By:
Samantha Partington
Posted:
Updated:
15/05/2017

Voters seem to be holding fire on buying or selling a property until after the general election, as one national estate agent reports exchanges slumped by almost 30% year-on-year in April.

Haart, part of the Spicerhaart group, exchanged on 39,804 house sales last month, slightly less than the previous month when transactions levels were 1.6% higher.

While new homes and new sellers registered with the agency both fell, demand for properties has dropped by a greater amount.

In April, overall new buyer registrations were almost 40% lower than the same period in 2016, and 8% down on March. Properties coming on to the market fell 24% year-on-year but remained stable on the previous month.

First-time buyer woes

Demand among first-time buyers waned significantly both on a monthly and yearly basis. Fledgling buyers registering with the agency fell 10% and 35% respectively.

The average deposit needed for a buyer to secure their first home now stands at £38,615; 6% higher than March. The average loan-to-value was 79%. This suggested that first-time buyers were unable to afford a mortgage with a smaller deposit, as mortgage deals of 95% LTV were still available for those who can pass the stringent stress test and income and outgoings assessments conducted by lenders since the introduction of the Mortgage Market Review.

Election woes

Haart’s chief executive Paul Smith said the forthcoming election was causing the slowdown in buying and selling activity, which was typical of all elections. He said the brief run-up to the vote would help to minimise disruption to the market and allow it to resume normal activity again.

He added: “A general election should be a good thing in the long run. A clearer vision on Brexit should hopefully allow for a new government to stop being distracted, and put more pressing issues such as housing and homeownership first. As the chronic housing shortage continues to spiral out of control, and the size of deposits and Stamp Duty continues to soar, purchasing a property remains nothing but a pipe dream for millions.”

The British Bankers Association reported mortgage approvals dropped for the third straight month in March. Some 41,060 purchase deals were approved, down from 42,247 in February and 44,240 in January.

Average house price

Haart reported a 3% annual decline in average sold house prices, year-on-year with the price of an average property resting at £223,244.

First-time buyers were facing an average price tag of £182,035 – 7% higher than the previous month. Londoners saw slight monthly (1.7%) and yearly (0.5%) declines in house prices. The average house price in London was recorded at £563,171.

Haart’s house price data contradicts that of rival national estate agencies Your Move and Reeds Rains, owned by LSL, which reported annual sold prices had risen by 3% across England and Wales. LSL pegs the average house price for April at £301,606.