UK housing market hit by political uncertainty, says RICS

Residential property price growth in the UK has fallen to its lowest level for almost a year as political uncertainty continues to have an adverse impact on the housing market, according to the latest poll of surveyors.

The research found that activity levels have been stifled by the recent general election and ongoing Brexit negotiations with the average number of homes on surveyors' books dropping to the lowest level since records began in 1978.

A net balance of 7% of companies questioned across the UK witnessed an increase rather than decline in property prices last month, down from a balance of 17% in May and the lowest reading since July 2016.

The number of homes changing hands in June fell for the fourth consecutive month, reflecting both the lack of housing stock coming onto the market and a more cautious approach that many purchasers are now adopting.

According to the data from the Royal Institution of Chartered Surveyors (RICS), 44% cited political uncertainty as the main cause for the slowdown in the housing market, with just over a quarter (27%) pointing to Brexit.

Simon Rubinsohn, chief economist at RICS, said: “Perhaps not surprisingly in the current environment, the term 'uncertainty' is featuring more heavily in the feedback we are receiving from professionals working in the sector.

“This seems to be exerting itself on transaction levels which are flatlining and may continue to do so for a while particularly given the ongoing challenge presented by the low level of stock on the market.”

Overall sentiment within the RICS survey has remained quite pessimistic over the last few months, and so this latest outlook of a dip in house prices and market activity is not surprising, according to Jeremy Duncombe, director at Legal & General Mortgage Club. 

But he also pointed out that when compared to the wider economic and political landscape, the housing market has continued to “amaze many”.

“It has remained consistently robust, despite everything we have seen over the last 12 to 18 months,” he said. “In light of this, there is nothing to suggest that the market is in dire straits.”

Duncombe continued: “The northern hotspots of Manchester, Leeds and Birmingham are continuing to see strong price growth and first-time buyer levels are up by 10% year-on-year - nearly doubling from the market low in 2009. A flattening in London is also not necessarily a bad thing, as the North/South divide begins to even out.”

However, he accepts that more needs to be done to ensure that efforts are focused on “building more homes in order to re-balance supply and demand”.