Housing market 'losing momentum' as election approaches

The housing market continued to lose momentum during April as potential buyers remained cautious in the face of the General Election, research showed today.

The rate at which properties in England and Wales came on to the market also outstripped demand from new buyers for the third consecutive month, further reducing the recent upward pressure on prices.

Property intelligence firm Hometrack said estate agents were reporting that buyers were taking longer to commit to properties, with the number of viewings needed per sale increasing for the third consecutive month.

At the same time, the percentage of their asking price that sellers were achieving remained unchanged at 94%, ending a 13-month run during which it had increased, while the average time it takes a home to sell has plateaued at 8.3 weeks.

Prices edged ahead by just 0.2% during the month, following increases of 0.3% during each of the previous two months, and Hometrack said estate agents appeared to be finding it increasingly difficult to maintain price rises while still achieving sales volumes.

Richard Donnell, director of research at Hometrack, said: "The supply of homes for sale continues to outstrip demand.

"This is a trend that has been evident for the last quarter, but lies in stark contrast to the final months of 2009, when buyers far outnumbered the supply of properties for sale.

"As the supply of homes for sale continues to outpace demand, so the impetus for price rises is set to wane."

The group said the number of potential buyers registering with estate agents had risen by just 1% during the month, while the supply of homes being put up for sale had increased by 3.7%.

It said the election was being cited as a factor behind the growing buyer uncertainty, and had contributed to a sharp slowdown in the rate at which agreed sales were increasing, with this dropping from 13% to 6.9% during the month.

Mr Donnell said: "There has been evidence for some months that the supply/demand balance has been changing steadily, but the buyer slowdown has been exacerbated by the announcement of a May election."

Hometrack also warned the headline figure for house price rises during the month was being skewed by the London market, where the average cost of a home rose by 0.6%.

But in Yorkshire and Humberside prices fell by 0.1%, while in Wales they remained unchanged.

Overall, house prices increased in just 19.4% of postcode areas during the four weeks.