Prolonged Brexit
uncertainty will likely further damage the UK housing market, according to the
latest RICS UK Residential Market Survey.
The latest results
from the February survey show a continued decline in activity across the UK
housing market, with new buyer enquiries, agreed sales and instructions all
falling. This is the sixth consecutive month all three have fallen together.
The headline price balance also slipped to its lowest reading since 2011.
Significantly, in an
additional question in the survey this month, over three-quarters (77%) of
respondents confirm Brexit uncertainty is holding back activity in the market,
as buyers and sellers sit tight, resulting in near-term activity indicators pointing
to further declines.
The RICS
survey has long highlighted the impact Brexit uncertainty has had on the
housing market, as stock levels hit all times lows, activity stalled, and sales
took longer to complete. That said, in recent reports the twelve-month outlook
has remained broadly positive, reflecting the hope that greater clarity will
emerge after March 29 (assuming the UK leaves the EU on this date).
Looking at the key
activity measures in detail, buyer demand fell for the seventh consecutive
month in February as 41% more respondents reported a fall in the number of new
buyer enquiries, and the volume of agreed sales also slipped, with the
indicator now having displayed a flat or negative trend since March 2016. This
near-term uncertainty is set to linger for the coming three months, with
sentiment for sales remaining subdued. Looking further ahead, however, the
twelve-month sales expectation suggests a slightly more positive outlook.
As the lack of
stock, in addition to Brexit, appears to be holding back buyer demand, 29% of
contributors reported a decline in new instructions being listed over the
month. This is the eighth consecutive month where respondents have reported a
fall in the number of new properties being listed for sale. Average stock
levels are now back to record lows, and respondents cited this as the next
biggest challenge after Brexit.
Following Theresa
May's latest Brexit deal defeat, regardless of whether the UK now leaves the EU
with or without a deal, the impact of further uncertainty is expected to be
felt across all tenures of the housing market.
Simon Rubinsohn,
RICS Chief Economist, said: "Although activity in the housing market
continues to be weighted down by the lack of available stock, changes in the
tax regime affecting property, and affordability; feedback to the latest RICS
survey makes it pretty clear that the ongoing uncertainty around how Brexit
will play out is the critical factor influencing both buyers and sellers. And
with little sign that the issue will be resolved anytime soon, it could prove
to be a challenging spring for the housing market and the wider economy.
"It is clear
from professionals working in the market that this environment requires a
greater degree of realism from those looking to move. A reluctance from some
vendors to acknowledge the shift in the balance of power in the market will
compound the difficulty in executing transactions."
Hew Edgar, RICS Head
of Policy (Interim), said: "It is clear from recent month's survey results
that the wearisome state of British politics that has arisen from Brexit –
particularly in the last six months – continues to take their toll on UK housing.
Taking Brexit out the equation, there are clear issues that need to be tackled
such as supply; a disputable SDLT framework; and a faltering PRS system. All of
which have been overshadowed, and have therefore not received the much needed
parliamentary discussion and debate.
"UK
Parliamentarians must recognise that the prolonged uncertainty without effort
to address separate key issues in the UK, is damaging confidence in the housing
sector, and we share the resounding sentiment of frustration from our
professionals."
