The performance of the UK housing market this year will be shaped by Rishi Sunak’s decision to call a general election on 22 May, according to Knight Frank.
The estate agency believes that it is now a good time to be a homebuyer, with election uncertainty contributing towards a recent decline in house prices.
Tom Bill, head of UK residential research for Knight Frank, said: “Amid the political fanfare of the last three weeks, the fact financial markets have pushed out their rate cut expectations to November has slipped under the radar.
“It is largely thanks to the stubbornly-high services inflation number of 6% released on 22 May, although the picture has since become hazier. Last week, strong UK private sector wage growth won’t have helped the case for an early cut but falling US inflation will.
“Overall, mortgage rates are unlikely to fall meaningfully any time soon and that, together with a degree of political uncertainty, is keeping demand in check.
“Ironically, it has rarely been a better time to be a buyer in recent years.”
Bill refers to Knight Frank data that shows there were 5.9 new prospective buyers for every sales instruction in the UK in May.
He continued: “Buyers have only faced less competition once during the last five years, two months after the mini-Budget in December 2022, as the chart shows.
“As the Nationwide and Halifax indices have demonstrated in recent months, higher supply and lower demand is putting downwards pressure on prices. It is something that sellers should bear in mind, together with the reality that a wave of owners are rolling off sub-2% mortgages.
“The autumn market is likely to begin with greater political certainty, but will it be further buoyed by a rate cut?
“Inflation data this Wednesday will provide a good steer as to whether current expectations for November look too gloomy or if a cut is more likely in August or September.
“Whatever month it happens in, buyers can certainly expect stiffer competition after the summer.”
Home sellers forced to cut asking prices as supply rises
