EU vote in the frame over housing market ‘uncertainty’
- Credit: PA
The EU referendum could contribute to a slowdown in house price growth in the coming months, according to surveyors.
The Royal Institution of Chartered Surveyors (Rics) said its latest survey of members shows a “climate of uncertainty” lies ahead for the UK’s housing market.
It said new stamp duty changes which have made the tax more expensive for buy-to-let investors, the EU referendum and forthcoming devolved elections are all behind this expectation.
These factors have been most strongly felt in central London, where 38% more surveyors expect to see house prices fall than rise over the next three months.
For the first time since 2008, expectations for house sales in the near term have turned negative, the survey for March found.
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Across the UK, a balance of 2% more surveyors expect to see house sales fall rather than rise over the coming months.
Confidence around house price inflation has also dampened with a net balance of 17% of surveyors across the survey expecting to see prices increase rather than fall over the next three months, down from a balance of 44% in December.
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In the longer term, with the supply of homes on the market still tight, property values are predicted to be still heading firmly upwards. House prices are expected to increase by nearly 25% over the next five years.
And over the next 12 months, house sales are projected to increase across all parts of the country.
London, the South East and East Anglia tend to be seen as over-priced to some extent by surveyors, while Wales and Scotland appear to be the most reasonably-priced housing markets currently, the survey found.
Estate agents recently reported dealing with a bottleneck of buy-to-let investors rushing to beat the April 1 deadline for a three percentage point stamp duty increase that was imposed on that sector. Some investors will have brought forward house purchases which may otherwise have taken place later this year.
A Bank of England survey of lenders has found demand for buy-to-let borrowing is expected to fall “significantly” in the coming months.
Simon Rubinsohn, chief economist at Rics, said: “As expected, the buy-to-let rush has now run its course, and as a natural result, the market is starting to slow.
“But there are other significant factors that are currently weakening short term confidence in the UK property market.
“Elections inevitably bring with them periods of uncertainty in the market, and our figures would suggest that next May’s devolved elections are no exception.
“Likewise, the EU referendum, is likely to be an influencer in terms of the damper outlook for London in particular.”
Mr Rubinsohn continued: “However, all indications suggest that whatever the outcome of the forthcoming elections and referendum, in the long term, the imbalance between demand and supply will still exert a strong influence on the market, with house prices expected to rise by close to 25% over the next five years.”
The survey quoted Ian Perry, of Gloucestershire-based estate agent Perry Bishop and Chambers, who said: “We were very busy leading up to stamp duty changes. The Brexit debate may slow the market in the next couple of months.”
David Lewis, of West Devon and East Cornwall estate agents, said: “We had a better than expected start to the year, with a good level of transactions, but are starting to see concerns relating to a Brexit.”