UK house prices steady, sales weakest in five months – RICS

House prices in London fell last month at the fastest pace since April but there were strong gains away from southern England, giving a broadly flat picture overall, the Royal Institution of Chartered Surveyors (RICS) said on Thursday.

The RICS said its monthly national house price balance edged down to +2 in August from July’s six-month high of +4, in line with average expectations in a Reuters poll of economists.

London has been the hardest-hit property market in the United Kingdom since 2016’s Brexit vote, with appetite for expensive city centre housing damaged by concern about financial services jobs after Brexit and higher purchase taxes.

The prospect of higher interest rates was a further concern, RICS said, after the Bank of England raised rates in August for only the second time in a decade and said it was on course to raise rates gradually.

RICS said its regional price balance for London sank to -52 in August, its lowest since April, while in Northern Ireland, where prices have yet to recover from the 2008 financial crisis, the index was a robust +48.

RICS economist Simon Rubinsohn said:

“It is clearly very difficult to talk about the housing market … without being acutely aware of the marked differences in trends across the UK. In many parts of the country the housing market actually remains quite firm.”

Sales volumes at a national level were the weakest in five months, but this mostly reflected a sluggish market in regions neighbouring London, with solid demand in Northern Ireland and southwest England.

In the longer term, RICS said its members expected rents to grow faster than house prices. Rents were forecast to rise by about 3 percent a year over the next five years, while prices were predicted to increase at an annual rate of 2 percent.

Kindly shared by Reuters UK