Experts warn that the possibility of a no-deal Brexit is dampening the housing market
UK house prices fell again in July as buyers continue to remain cautious as the prospect of a no-deal Brexit draws closer, according to surveyors.
The Royal Institution of Chartered Surveyors (RICS) says key areas of the market are “pretty much flatlining” with homes valued at more than a £1 million going for well below their asking price.
RICS’s residential market survey found a net balance of 9% surveyors reported house prices falling rather than increasing.
It says that 69% of surveyors were seeing properties worth more than £1 million being sold below the original asking price.
On a regional basis, prices were seen to be rising at a “solid pace” in Northern Ireland, Scotland and Wales. However, prices continue to fall in London, the South East and East Anglia.
Near-term predicted sales are flat, with prices expected to deteriorate over the coming months.
Simon Rubinsohn, RICS chief economist, says the results will provide "little comfort” for the market
He says: “Indeed, the forward-looking metrics on prices and sales also seem to losing momentum as concerns, clearly voiced in the anecdotal feedback, both about Brexit and political uncertainty heighten.
“Some support may be provided by an easing in the cost of money which could feed through into lower mortgage finance costs, but this may be insufficient to provide a spur to lift activity given the clouds hanging over the economy.”
RICS says that with demand for homes for rent at its highest since the end of 2016 and falling supply in the lettings market rents a likely to increase.
House prices have fallen by over £600 in the last three months, taking the average house price down to £236,120, according to Halifax.
With Brexit delayed until the end of October, the threat of a no deal is set to weigh on the market with little change in prices over the coming months, experts have warned.
Howard Archer, chief economic adviser to the EY Item group, says: "Uncertainty will weigh down on the economy over the next few months at least and hamper the housing market.
"Consumers may well be particularly cautious about committing to buying a house, especially as house prices are relatively expensive relative to incomes."
Earlier this week, Halifax reported a 4.1% drop in annual house prices for July. On a monthly basis they fell house prices fell by 0.2% in July compared to 0.4% in June.
Russell Galley, managing director at Halifax, says: “The market continues to tread water with marginal increases or decreases in each monthly period. That said, it’s worth remembering that while economic uncertainty continues to weigh on the market, the overall trend actually remains one of comparative stability, with average prices down by less than £600 over the last three months.
“We have seen a reported drop off in the number of properties sold during the early months of summer, which may lead some to speculate a downturn is on the horizon. However, new buyer enquiries are up, and favourable mortgage affordability – driven by low interest rates and strong wage growth – should continue to underpin prices for the time being.
“In the longer-term, we believe there is unlikely to be a step change in market activity until buyers and sellers see some form of resolution to the current economic uncertainty.”