UK housing market slows after June bounce – RICS

LONDON (Reuters) – UK housing market slows in July after a small bounce the month before, a survey showed on Thursday, adding to signs that Brexit worries are again making households cautious about shopping for a new home.

The Royal Institution of Chartered Surveyors said its headline price indicator fell back to -9 from a 10-month high of -1 in June, a steeper decline than any economist had predicted in a Reuters poll.

The news follows figures from mortgage lender Halifax on Wednesday which showed house prices fell in July for a second consecutive month.

RICS chief economist, Simon Rubinsohn, said:

“The latest RICS results will provide little comfort for the market with all the key indicators pretty much flatlining.

“The forward-looking metrics on prices and sales also seem to be losing momentum as concerns … about Brexit and political uncertainty heighten.”

Surveyors’ average forecast for house prices over the next 12 months dropped to -0.1% from +0.6% in June, its first time below zero this year, while the average annual price increase expected over the next five years dropped to 2.1%.

Britain’s new prime minister, Boris Johnson, has said he is determined to exit the European Union on Oct. 31, even if it means leaving without a deal – something many businesses think would lead to major economic disruption.

The housing market has already slowed since June 2016’s Brexit vote, though the effect has been concentrated in London and neighbouring areas, where prices were already high.

July’s RICS data did show an improvement in the number of inquiries from potential buyers for a second consecutive month, but the number of sales fell.

RICS said more than two thirds of homes priced at over 1 million pounds failed to sell for their asking price, in contrast to homes priced under 500,000 pounds, most of which sold for at least what they were advertised for.

Demand from tenants to rent homes also strengthened to its highest since late 2016, and surveyors predicted rents would rise at their fastest in three years as fewer small landlords wanted to enter the market due to less favourable tax treatment.

Kindly shared by Reuters UK