Price of UK homes hits a new record high after election

London housing shoots up by nearly 6 per cent after a 2.3 per cent fall in May amid concerns over Labour's proposal for a new 'mansion tax'

PUBLISHED : Wednesday, 17 June, 2015, 12:02am
UPDATED : Wednesday, 17 June, 2015, 12:02am

The average asking price for homes in England and Wales hit a new record high as buyers returned to the market after last month's national election, property website Rightmove said.

The average asking price in the period between May 10 and June 6 jumped by a monthly 3 per cent to £294,351, Rightmove said in a statement on Monday.

Prices in London shot up by nearly 6 per cent after a 2.3 per cent fall in the previous monthly figures when there had been concerns about the opposition Labour Party's proposal for a new "mansion tax" on expensive properties.

In annual terms, prices in England and Wales were up 4.5 per cent.

The Conservative Party's success in winning an unexpected majority in parliament in the May 7 election helped boost the number of buyers but an anticipated increase in sellers had not occurred and supply fell, it said.

"Some buyers had been holding back in the weeks before the election, leading to some sellers suffering an unseasonal price stand-still in the late spring," said Miles Shipside, Rightmove's housing market analyst.

The new government urgently needed to play its part to deliver more new homes and stop asking prices being pushed up further, he said.

Several other measures of British house prices have recently shown the market heating up again after new rules on mortgage lending caused a slowdown last year.

Last week, the Royal Institution of Chartered Surveyors said its monthly index - which measures members' expectations for house prices over the next three months - rose to plus 34 in May from plus 32 in April, broadly in line with economists' forecasts.

This takes the index to its highest level since August last year, when property prices were just starting to cool after reaching double-digit rates of growth earlier in 2014.

RICS said the number of people looking to buy a house rose sharply in May. But the same was not true of people wanting to sell houses, despite an unexpected victory for Prime Minister David Cameron's Conservatives over the opposition Labour Party, which had planned higher taxes on luxury homes.

"As a result, it is hardly surprising that prices across much of the country are continuing to be squeezed higher with property set to become ever more unaffordable," said RICS chief economist Simon Rubinsohn.

The number of properties on sale per surveyor was now its lowest since the survey started in 1978, RICS said, and prices were likely to rise by a quarter over the next five years.

Cameron has pledged to increase the number of homes being built, but recent measures have boosted demand for housing rather than construction.

"There is no real confidence that the measures necessary to deliver a meaningful boost to new supply will be put in place anytime soon," Rubinsohn said.