House market weakens as Brexit fears bite - RICS

The UK housing market got off to a weak start in 2019, with enquiries, sales and new instructions all down, as Brexit uncertainty continued to take its toll.

The RICS UK Residential Market Survey found that the number of new properties being listed in January had deteriorated to a net balance of -25%, the lowest since July 2016.

New buyer enquiries had also fallen on a seasonally-adjusted basis, the sixth successive monthly decline. Agreed sales declined as well.

The average time taken to sell a property continued to lengthen, meanwhile, reaching 19.4 weeks – the longest since 2017 when RICS started measuring the data point.

Contributors to the survey blamed Brexit for the weaker market conditions: “In the near term, contributors sense little prospect of a turnaround, as concerns over the potential impact of Brexit continue to cause hesitancy, alongside affordability constraints in parts of the country.”

Simon Rubinsohn, chief economist at RICS, added: “Although some contributors to the survey have taken comfort from a better start to the year than anticipated, a larger proportion are continuing to find the market a difficult one in which to do business.

“Resolution of the Brexit negotiations is widely seen as critical to encouraging potential buyers back into the market, although whether that will be sufficient in London and parts of the South East, where affordability remains stretched and the tax changes are most penal, remains to be seen.

“Meanwhile, the lettings market is continuing to see instructions fall away as investors respond to the emerging fiscal and regulatory landscape.”

Looking ahead, respondents were negative about sales expectations for the coming three months in 11 out of the 12 regions covered. But the outlook for the next 12 months was stronger, with a headline net balance of +16% expecting sales to improve.

On Wednesday, the Office for National Statistics/Land Registry said that house price growth had slowed to 2.5% in the 12 months to December 2018, down from 2.7% in November and the lowest rate since July 2013.

RICS’s headline price indicator had a net balance of -22% for January, a fourth consecutive decline. London and the South East displayed the weakest readings, the body said.