Andy Burnham’s looming premiership is casting a shadow over the UK housing market just as it begins to stabilize following shocks from the Middle East conflict.
The Royal Institution of Chartered Surveyors reported that agents seeing a drop in buyer enquiries still significantly outnumbered those seeing an increase in June.
The gap between pessimists and optimists did narrow compared to May, offering a tentative sign of stabilization before domestic political concerns escalated.
Speculation about what a Burnham government means for property owners is now being widely cited by agents as a growing threat to market confidence.
Reports that the former Greater Manchester mayor is considering sweeping changes to property taxation have led many prospective buyers to delay decisions until there is greater clarity.
With no challengers to his leadership bid, Burnham is on course to succeed outgoing Prime Minister Keir Starmer this month.
“Any nascent improvement remains fragile and is now being tested by renewed political uncertainty on the domestic front,” said Tarrant Parsons, head of market research and analysis at RICS.
“Uncertainty around the outlook for inflation and borrowing costs continues to weigh on sentiment, even if the recent decline in oil prices is a welcome development,” Parsons added.
The RICS survey was conducted between June 1 and July 6, capturing the lead-up to Starmer’s resignation, the Bank of England’s decision to hold interest rates, and a tentative US-Iran ceasefire.
That ceasefire is now under threat after the US launched strikes on Iran following attacks on ships in the Strait of Hormuz that it attributed to the Islamic Republic.
Oil prices climbed for a second consecutive day Wednesday, and traders added to wagers that the Bank of England will raise rates to curb inflation.
More agents reported seeing values fall than rise in recent months, with the south of England recording the most negative price trends while Northern Ireland and Scotland saw an uptick.
The survey results align with data from UK mortgage lenders Nationwide Building Society (NBS) and Lloyds (LYG), which both reported weak or stagnant house price growth in June.
Nationwide said house prices failed to grow for a second straight month in June, with mortgage rates remaining elevated despite some easing in recent weeks.
Lloyds reported values edged up just 0.2% after falling 0.2% in May, underscoring the fragile state of the broader housing market.
Concerns about the political outlook were voiced by agents across York, Birmingham, and London, reflecting how widespread unease has become.
“The prevailing political uncertainty, compounded by speculation about what new or increased taxes the incoming PM will impose, is stifling activity in all but essential transactions,” said William Delaney, a property consultant at Coopers of London.
“In the Prime Central London market, one is searching for some positive news,” Delaney added in comments accompanying the RICS report.
Parsons warned that conditions are unlikely to improve quickly without clearer signals from both government and the Bank of England on the path ahead.
“Until there is greater clarity over both the political backdrop and the path of interest rates, housing market activity is likely to remain relatively subdued in the near term,” Parsons said.
