A hung parliament could have an adverse effect on house prices.

Property experts may well joke that the main party leaders should apply for change of use planning permission for 10 Downing Street - HMP (House of Multiple Occupancy) status. But there can be no doubt that the outcome of yesterday’s election casts doubt over the recovery of the housing market.

The uncertainty and indecision accompanying a hung parliament will have an immediate adverse effect, according to some estate agents. “The equity markets are unpredictable, especially with recent events regarding Greece, Spain and Portugal, and the state of these markets has a direct effect on the property market” says Matthew Sinclair, director of Saint Property.

Sellers will sit on their hands, awaiting clarify on HIPS and a possibly stamp duty review, says James Thomas, Head of Residential Investment and Development at Jones Lang LaSalle. “The spring market is traditionally a time when volumes in the property market bounce and activity levels peaks, however the result of yesterday’s general election will squeeze transaction volumes,” he says. “For developers, the ability to expediently process planning applications will be inhibited further as the power of centralised planners versus local councils now hangs in the balance. For many employees in the public sector, the imminent spending cuts pose a significant threat to their remuneration and job security.”

But Trevor Abrahmsohn of Glentree Estates believes that while the hung parliament will have a poor effect on the economy, its impact on the housing market will be minimal. “Strong leadership and conviction are important for the economy but a hung parliament will mean steady government with no radical moves, so the property market should continue to recover,” he says. “There will be no adverse effect. It’s a good time to buy and sell and if the pound continues to drop there will be more foreign investors.”

Marc Goldberg of Hamptons International agrees: “We do not expect the announcement of a hung parliament to adversely impact property market confidence in the first instance. While it remains to be seen which policies relating to the property market outlined in the various manifestos will be implemented, on the whole, it will be other market forces which impact general sentiment,” he says. “We expect key property market drivers, such as low interest rates and a weak pound, to continue to encourage further demand from both UK and overseas buyers.”

But he does not believe that prices will continue to rise. He encourages vendors to put their houses on the market immediately, rather than wait to achieve higher prices. “Demand is at healthy levels and despite a current shortage of property available right now, we are starting to see supply increasing and consequently prices are beginning to flatten,” he says. Indeed - the Halifax house price index suffered a 0.1 per cent fall in April.

Even the bullish Abrahmsohn expects there to be a slow down in transactions in the next few weeks, just as there was in the lead up to the election. “Inflation is a little worrying and could hold back the market,” he says. “And the pound will meander for a while. But house prices will probably be rising again by the end of the year and will continue to do so next year in the run up to the Olympics.”

Liam Bailey, Knight Frank - “Ironically, the much dreaded hung-parliament scenario could well lead to a beneficial impact for foreign buyers. A currency crisis might shave yet another 10% or 20% off effective prime London prices for dollar and euro buyers who have been piling into the market since the pound began to weaken in late 2008.”

Michel Fiddes, Strutt & Parker - “A hung parliament will mean a weaker pound which is good news for foreign buyers in London but apart from the natural ripple effect out of London for the country market the real issue will be taxation. The predominant market drivers are sentiment and confidence both of which will be badly affected by a hung parliament which shows weakness and lowering in confidence levels both of which will have a negative impact on the property market overall.”

Ed Mead, D&G - “Uncertainty is the property owners worst enemy. Many will hesitate to sell of buy during this period and perhaps the pound will stay weak, so perhaps not much will change. In other words no one moving, foreign buyers pumping up prices in London and everyone else, especially property professionals, suffering from lack of transactions.”

Tags: Election, Hung parliament, Matthew Sinclair, property market, Saint Property, Scottish property