"If history is any guide, the slowdown is unlikely to be linked to election-related uncertainty"
The data for May showed that annual house price growth dipped to 2.1%, the weakest in almost four years, providing "further evidence that housing market is losing momentum".
Nationwide analysed house price movements in the months around previous elections, and also last year’s EU referendum, and found that past general elections do not appear to have generated volatility in house prices or resulted in a significant change in house price trends or mortgage approvals.
Robert Gardner, Nationwide's Chief Economist, said: “If history is any guide, the slowdown is unlikely to be linked to election-related uncertainty. Housing market trends have not traditionally been impacted around the time of general elections. Rightly or wrongly, for most home buyers, elections are not foremost in their minds while buying or selling their home.
On the whole, prevailing trends have been maintained just before, during and after UK general elections. Broader economic trends appear to dominate any immediate election-related impacts. It is too early to conclude whether the slowdown in house price growth is merely a blip, a reflection of the impact of the squeeze on household budgets, or is due to mounting affordability pressures in key areas of the country.
Given the ongoing uncertainties around the UK’s future trading arrangements and the upcoming election, the economic outlook is unusually uncertain, and housing market trends will depend crucially on developments in the wider economy.
Nevertheless, in our view, household spending is likely to slow in the quarters ahead, along with the wider economy, as rising inflation increases the squeeze on household budgets. This, together with mounting housing affordability pressures, is likely to exert a drag on activity and house price growth in the quarters ahead."
Russell Quirk, founder and CEO of eMoov.co.uk, had this to say: "A third consecutive drop may seem like a reason to worry for UK homeowners, but house prices still continue to climb despite the slowdown in the rate of growth.
It is unclear as to whether the market is losing momentum or if buyer demand is unseasonably hibernating due to the oncoming election, but Nationwide have been quick to highlight that previous elections have had little impact on traditional house price trends.
It’s fair to say, however, that previous years were a tad more routine that a snap election called in the middle of negotiations to leave the EU and it is likely that the market is seeing an influence from both sides.
House prices, along with the gap when compared to earnings, have continued to increase and such a pattern is unsustainable in the long term. It is likely that we will see the market let off a little steam and naturally adjust over the coming months and overall it should stabilise once the election dust has settled and buyer confidence returns to full force."
Jonathan Hopper, managing director of Garrington Property Finders, commented: "For the property market, it’s a case of three strikes and you’re out of form. The last time house prices fell for three months in a row was in the dark days of 2009. While the property market – and the economy – are a world away from then, the 2017 dip is slowly turning into a downturn.
The irony is that just two months ago activity in many areas was brisk, as the clouds of Brexit hesitancy began to part. But the election announcement hit the market like a thunderbolt and has put on ice the typical spring surge in buyer interest. Over the coming weeks the market will remain under close scrutiny to establish whether we are seeing a new trend or if the current lull will be short-lived.
If the election result puts Brexit back on track, by the end of the month the property market could clear the current speed bump - freeing up more supply and with greater levels of clarity spurring discretionary buyers into action.”
