Brexit uncertainty led to demand falling to the lowest level seen since 2013, according to the latest housing market report.
The report for May from the National Association of Estate Agents (NAEA) shows that estate agents recorded an average of 304 house hunters registered per member branch in May, down 6% month-on-month, as uncertainty in the lead up to the referendum deterred many would-be purchasers.
Buyer demand in May was the lowest recorded since November 2013 when 292 buyers were registered per branch. Compared to May 2015 when 383 house hunters were recorded – demand has plummeted by 21% year-on-year.
But while the number of house hunters registered per branch and sales agreed dropped in May, sales to first-time buyers rose slightly, with 27% of the total sales completed going to first-time buyers, up 1% month-on-month.
In line with the overall decline in demand, the supply of homes available to buyers rose marginally – from 35 properties available to buy per branch in April, to 37 in May.
Mark Hayward, managing director, NAEA, commented: “The EU referendum without doubt meant that May was a month of uncertainty for potential house buyers – demand dropped significantly and is currently at the lowest level we have seen in the last three years.
“As a result of the vote for a Brexit, we expect international investors to look a lot harder at the UK as a potential market to buy in and this will have a knock on effect on the house building sector, as investments may be delayed or put off completely. Although in the short term, we believe that house prices will remain stable, we cannot be certain about the next quarter as political uncertainty and market unrest could affect the housing market.
“As this month’s findings show, the supply of available housing is still extremely low compared to this time last year, which is particularly worrying. As we continue to say, there are simply not a sufficient number of homes available in this country to cater for everyone’s needs and a Brexit could impact the skills required to drive property developments in the UK. This means that in the longer term, something will need to give which regrettably could mean a surge in house prices or buyers struggling to find a suitable property in order to move or get that first foot on the ladder. ”