Mixed picture for post-election housing market

Mortgage lenders, borrowers, buyers and sellers alike have been sitting on their hands to await the outcome of today's election.

But, regardless of the result, the UK’s housing market will remain a patchwork of micro-markets after the dust has settled.

Election uncertainty has led to a slowdown in transactions in the capital, with Central London sales dropping off by 25% between March and April, according to top-end estate agent Knight Frank.

A hung parliament could prolong this inactivity, but interest in property buying remains robust, and London homes have gained more than 13% in value over the past 12 months, according to the Land Registry.

Nationwide Building Society tells us that, on average, annual house prices have increased by 10.5% across the country in the last year, although there are big regional variations.

For example, in the East Midlands property prices fell by 2.1% in March alone, and the annual rate of growth is just 5.1%.

And while low interest rates and lender forbearance have protected most of the country from the spectre of repossession so far, the number of homes forecast to be repossessed in 2010 is expected to rise from 46,000 in 2009 to 53,000, as the lagging impact of unemployment takes effect.

At the same time a shortage of council housing has led to an increase in the waiting list from 1m to 1.76m.

A consultant observed:

“No matter which party wins, lending criteria by the main banks and building societies remain the overall driver. With rates of employment, these are the key factors affecting the health of the housing market.”