Could a house price slump reshape the next election?

All the main parties talk about house-building but without a solid plan, says Sean O’Grady

It is probably bad news for the Conservatives to enter an election year with a weak or falling housing market (PA Archive)

Average UK house prices fell by 3.4 per cent in the year to May – the fastest annual fall since the 2009 financial crisis – according to the Nationwide building society. It warns that “headwinds to the housing market look set to strengthen in the near term”. House prices edged down by 0.1 per cent in the month of May itself, and the average property price now stands at £260,736 – about 4 per cent below the August 2022 peak.

What is causing the slowdown?

Obvious immediate factors include cost-of-living pressures, sharply rising interest rates, and relatively weak consumer confidence. Longer term, Britain’s housing has suffered from a lack of supply, caused by a mixture of restrictive planning rules, political resistance to building in rural and semi-rural areas, and the extreme personal tax breaks given to investment in residential housing (favouring buy-to-let landlords).