The Royal Institute of Chartered Surveyors has blamed uncertainty surrounding the EU referendum for a marked drop in housing market activity last month.
New buyer enquiries declined significantly across the UK in June, with 36 per cent more chartered surveyors nationally reporting a fall in interest; the lowest reading since mid-2008.
The south of the UK has been the hardest hit, with anecdotal evidence suggesting both the EU result and the stamp duty tax changes at the beginning of April, having an impact on sentiment.
There was a further fall in the supply of properties coming available for sale across the UK in June, with the exception of Northern Ireland, with 45 per cent more chartered surveyors seeing a fall in new instructions in June, from a net balance of -31 per cent in May.
This is the steepest fall on record and extends a trend that has been in place since 2014.
A third successive monthly drop in sales activity was also recorded by RICS, with 26 per cent more respondents anticipating a further drop in sales across the UK over the next three months.
This is the most negative reading for near term expectations since 1998. Looking ahead over the next 12 months, sales expectations have turned negative for the first time in four years, with 12 per cent more contributors expecting transactions to fall rather than rise.
Although house prices are still rising, they are doing so at a more moderate pace, with 16 per cent more respondents reporting prices rise rather than fall across the UK. London remains the only region where respondents are seeing prices fall (-46 per cent net balance) with this largely being concentrated in the central zones.
Over the next 12 months the dip in prices is only expected to persist in London and East Anglia (net balances of -39 and -34 per cent respectively) and longer term prices are still expected to rise, with a cumulative increase of 14 per cent projected for the next five years.
Simon Rubinsohn, RICS chief economist, noted elections typically unsettle markets, so it is no surprise that the EU referendum has been associated with a downturn in activity.
“However, even without the build up to the vote and subsequent decision in favour of Brexit, it is likely that the housing numbers would have slowed during the second quarter of the year, following the rush in many parts of the country from buy to let investors to secure purchases ahead of the tax changes.
“RICS data does suggest that the dip in activity will persist over the coming months, but the critical influence looking further ahead is how the economy performs in the wake of the uncertainty triggered by the vote to leave.”
Stephen Smith, director at Legal & General Housing Partnerships, said RICS’ outlook seems somewhat pessimistic.
“Since the referendum the market has not experienced issues that would normally indicate a downturn; crucially we are not seeing an upturn in forced sales. In order to maintain a stable market we must see a continued availability of good value mortgage products, on the current terms for loan to value and credit scores.”
Also out today was data from the LSL and Acadata England and Wales index, which confirmed house prices edged up in June, despite the Brexit uncertainty.
After three consecutive months of dipping house prices, including a 0.9 per cent drop in May, they recovered by 0.6 per cent last month. Year-on-year, prices have risen by 6 per cent, with the average house sale now reaching £293,444.
Transactions in the three months to June increased 8 per cent, compared to the same period in 2015, however these figures reflect the March stamp duty surge.
In June, an estimated 72,000 sales were completed, 13 per cent lower than in 2015, but up on the 55,250 figure for May.
House Price | Index | Monthly Change % | Annual Change % | Annual % (excluding London & the SE) |
£293,444 | 286.2 | 0.6 | 6.0 | 5.1 |
Adrian Gill, director of Your Move and Reeds Rains estate agents, said Brexit will undoubtedly have a wide range of consequences for the housing market, but it would be wrong to assume these will all be negative.
“What is clear is that the impact of April’s stamp duty increase has now largely played out, and there’s little evidence to suggest it has significantly hit investor appetite: first time landlords seem no less common and there’s new interest in mixed commercial and residential purchases, such as flats over shops that escape the increase.”
peter.walker@ft.com
