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Residential UK property market at weakest since 2012 as Brexit takes toll – Rics

Surveyors say indicators for demand, supply and prices fell to multiyear lows in November

Brexit is battering the UK property market, pushing it to its weakest level in more than six years, with almost half of surveyors reporting that sellers and buyers are sitting tight because of political uncertainty.

The Royal Institution of Chartered Surveyors (Rics) said its monthly indicators for demand, supply and prices fell to multiyear lows in November.

The number of people looking for a new home fell again, with many surveyors attributing this to Brexit uncertainty. The net balance of -21%, down from -15% in October, was the lowest since September 2017.

Weaker demand dragged down property prices. The price balance slipped to -11% in November from -10% in October, marking the lowest reading since September 2012.

House prices have been falling in London, the south-east and East Anglia, while in the south-west, east Midlands and north-east they have been broadly flat. There were price rises in Northern Ireland, Scotland, West Midlands, Wales, Yorkshire and Humber and the north-west.

The Rics findings echoed figures from Britain’s biggest mortgage lender Halifax, which showed house prices growing at an annual rate of 0.3% in November, the slowest since December 2012.

Simon Rubinsohn, Rics’ chief economist, said: “It is evident … that the ongoing uncertainties surrounding how the Brexit process plays out is taking its toll on the housing market. I can’t recall a previous survey when a single issue has been highlighted by quite so many contributors.

“Caution is visible among both buyers and vendors and where deals are being done they are taking longer to get over the line. The forward-looking indicators reflect the suspicion that the political machinations are unlikely to be resolved anytime soon.”

He said a weakening property market could prompt a slowdown in housebuilding: “The bigger risk is that this now spills over into development plans, making it even harder to secure the uplift in the building pipeline to address the housing crisis.”

Rics said the number of new properties being listed for sale fell for the fifth month, to a net balance of -24% – the fastest rate of decline in more than two years. Estate agents only have 42.1 homes for sale, on average, close to record lows. The number of new appraisals by property valuers was also down.

The number of agreed sales fell in November, with the net balance down to -15% from -10%, and this sentiment was reflected in almost all areas of the UK.

Many surveyors and agents said the seasonal slowdown before Christmas had started earlier than usual. Mark Duckworth, of Martin & Mortimer in Ely, said: “The Brexit effect is best described as a cold and wet blanket which is depressing appetite for property.”

The survey suggested little expectation of any change on the horizon. Sales expectations for the next three months dropped from -6% to –23% in November – the fastest pace of decline since June 2016, when the EU referendum was held.

In the rental market, demand from tenants was holding steady, while the flow of rental homes on to the market continued to slow, Rics said. This is expected to result in modest rent rises over the next 12 months, it added

Remortgaging has reached its highest level in almost a decade, while the buy-to-let market has collapsed after tax changes, according to figures from UK Finance, the body for the banking and finance industry. Lending for buy to let plunged 20% year on year to £800,000 in October.

Bank of England data showed this week that the value of outstanding mortgage balances with some arrears increased for the first time since mid-2016, to £14.5bn in the third quarter.

Source: The Guardian