Home sales took a back seat during the General Election

All key market indicators showed a marked slowdown in the month, as both buyers and sellers sat on their hands, according to research for property intelligence group Hometrack which is published today.

The rate at which new buyers registered with estate agents halved during May, with agents reporting an increase of 0.5 per cent, while the number of people putting their home on the market rose by only 1.8 per cent, down from 3.7 per cent in April.

The volume of sales agreed rose slightly, inching ahead by two per cent, but this was well down on the average rise of nearly 10 per cent in each of the previous three months.

Richard Donnell, director of research at Hometrack, said: "The May survey shows how uncertainty generated by the election had a clear impact on housing market activity with fewer buyers coming to the market, a marked slowdown in sales agreed and a drop off in the number of new homes for sale."

The group said house price rises were seen in only a fifth of postcode areas; more than half of these were in London and the South East.

But it said despite weaker demand from buyers and growing supply levels, there still remained upward pressure on prices due to a shortage of stock, with the increase in agreed sales outstripping the number of new homes coming on to the market during the past three months.

The group said this was enabling estate agents to quickly shift any new homes that came on to their books, while also increasing their confidence to raise asking prices.

Hometrack expects housing market activity to remain subdued over the summer and into the autumn as households shift their focus from the election to the emergency Budget and the implications it will have on the economy and pay.

It added that if the new Government announces plans to increase the rate at which capital gains tax is charged from the start of the new tax year, it could lead to a surge in homes coming on to the market as property investors take advantage of the current 18 per cent rate.

But it added that this would be unlikely to have much impact on overall house prices.