LONDON – Political uncertainty, record-low stock numbers, and the impact of tax changes continued to slow the “faltering” UK housing market in July, according to the Royal Institute of Chartered Surveyors.
The group’s UK Residential Market Survey is regarded as the best lead indicator for house prices.
It found the net balance of surveyors predicting price rises fell to +1% in July, down from +7% in June, suggesting price growth was near zero in the period.
That represents the softest reading since early 2013, although the figure disguises big regional variation. Price growth in south-east England is negative, for example, while it is positive in regions including Northern Ireland and south-west England.
RICS said the main element holding the market back was a sustained fall in new listings, with new instructions falling for the 17th month in the row. Fewer homes on the market means that estate agents’ books remain close to record lows, limiting choice for prospective buyers, and meaning more of them stay put in their existing homes.
Changes to stamp duty in April last year and a lack of new-build homes are also slowing the market.
London remains negative
Respondents in London reported a net balance of 48% for price declines, up from 45% in June. London’s housing market has been particularly badly damaged by Brexit-related uncertainty, as well as stamp duty changes introduced in April last year.
“This could continue for some time”
Simon Rubinsohn, RICS chief economist, said the survey was “worrying:”
“Sales activity in the housing market has been slipping in the recent months and the most worrying aspect of the latest survey is the suggestion that this could continue for some time to come.”
“One reason for this is the recent series of tax changes but this is only part of the story. Lack of new build in the wake of the financial crisis is a more fundamental factor weighing on the market.
“The flatter trend in price growth is arguably a silver lining but there is no real indication that the housing market will become materially more affordable anytime soon.”
Just 28% of respondents anticipated a price rise in the next three months – the lowest reading since July last year, following the EU referendum.