‘Never-ending Brexit saga’ weighs heavy on house prices with more falls expected

Buyers remain cautious ahead of the October deadline, experts warn.

The “seemingly never-ending Brexit saga” is continuing to bring property prices down, with sales expected to fall even more in the coming months, according to surveyors.

The Royal Institution of Chartered Surveyors (RICS) says that Brexit uncertainty is having a significant effect on sales, causing hesitation for buyers and sellers.

RICS’s residential market survey found a net balance of 24% of surveyors expect prices to drop in the next three months.

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Simon Rubinsohn, RICS chief economist, says: "It is hard to get away from the shadow being cast over the housing market by the seemingly never-ending Brexit saga. Indeed, uncertainty is a theme that respondents continue to highlight as a negative influence on sentiment in survey after survey.

“That said, the key RICS activity indicators have actually remained relatively resilient until now pointing to only a modest dip in transactions across the country rather than anything more severe.”

While sales expectations have weakened in almost all parts of the UK over the past two months, things are expected to improve modestly in the next year.

At the regional level, house price inflation remains “firm” in Scotland, Northern Ireland and Wales. However, prices were seen to be falling in the South East, East Anglia, and the North East.

August also saw flat demand from new buyers, following an increase in enquiries from potential purchasers in June and July.

RICS says rising tenant demand combined with the decline in the number of landlords listing properties will squeeze rents higher over the next three months.

Mr Rubinsohn says: "More ominously, the August RICS results again draw attention to the challenge in the lettings market, with feedback continuing to indicate that demand is outstripping supply. As a result, the pressure is for rents to continue moving higher and indeed outstripping any price gains both in the near and medium term."

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The UK housing market was hit hard following the EU referendum, with prices falling in some regions such as London and the South East.

Prime Minister Boris Johnson insists that Britain will leave the EU on 31 October, even if a deal has not been struck with the EU. However, Parliament has passed a law blocking the UK leaving the EU without a deal.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “These figures are disappointing bearing in mind their historic accuracy but they are not a lot different from what one would expect in August, particularly in view of continuing political uncertainty.

“On the ground, we have seen plenty of caution and many buyers and sellers sitting on their hands. However, longer-term buyers of smaller houses have been looking beyond Brexit and taking on view on likely price movements.

“Other recent market surveys bear out this trend - in other words, the market is showing more resilience than we might have dared hope. Certainly, we are not finding buyers and sellers withdrawing from transactions because of worries about an imminent market correction.”

- This article was first written by our sister magazine Moneywise.

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