UK housing market slows post-Brexit
Property prices across the UK have slowed to their lowest level in three years, according to a poll of surveyors.
The Royal Institution of Chartered Surveyors (RICS) has revealed that just 5% of surveyors reported a rise in prices across the UK in July – down from 15% in June. Also, buyer enquiries, agreed sales and housing stock levels all fell significantly in the three months to the end of July.
RICS reports that sales have declined sharply fuelled by the dip in demand and the worsening supply position. “Across the UK, 34% more respondents reported a fall in transactions, with the monthly pace of decline in both July and June at the fastest since 2008,” it says.
RICS Residential Market Survey also highlights the acute shortage of properties on estate agents’ books with a drop in new instructions and supply at record lows.
It suggests this could be due to a knock-on effect of April’s additional stamp duty on second homes and uncertainty in the wake of the EU referendum.
Upbeat about 12-month outlook
However, RICS remains upbeat about the 12-month outlook for the property market. The net balance of those expecting house prices to rise over the year was 23%, compared with zero in June. This is significantly lower than six months ago when 66% of surveyors said they anticipated house price rises.
When it comes to London, estate agents and surveyors are optimistic about its long-term prospects, suggesting around 4% house price growth a year over the next five years– 1% more than they predict nationally.
Simon Rubinsohn, RICS’ chief economist, says that in the current economic climate, and with the Bank of England’s latest policy measures, it is “not altogether surprising that near-term activity measures remain relatively flat”. He points out that key 12-month indicators in the July survey suggest confidence remains more resilient than might have been anticipate.
He adds: “It is hard to escape the stark message regarding supply that is evident in the latest set of results, with RICS data showing inventories on agents’ books around historic lows on average. This is a long-running story that may have been exacerbated by recent events, but clearly needs urgent action from the new government.”
‘Sense of realism has returned to market’
But not all surveyors or estate agents who took part in the poll are noting a downturn in activity. Some report that “after an initial wobble”, activity has returned to normal.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “On the ground, we are finding that a sense of realism has returned to the market and that genuine sellers and buyers are negotiating hard to make deals happen.
“Clearly there are some buyers who feel it is just too uncertain at the moment, but most seem determined to go ahead. In any event, prices are being underpinned by a continued shortage of property although we have noticed first-time buyers are still quite active and investors from abroad are showing more interest in the market,” he adds
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
Everything you own: all your assets (property, cars, investments, savings, insurance payouts, artwork, furniture etc) minus any liabilities (debts, current bills, payments still owed on assets like cars and houses, credit card balances and other outstanding loans). When you’re alive this is called your wealth; when you’re dead, it becomes your estate.