Political uncertainty dogging housing market, RICS says

House price inflation dropped again in June, due chiefly to domestic political uncertainty, according to the latest RICS UK Residential Market Survey.

Just 7% of surveyors across the UK saw a rise rather than fall in prices during June. This has slipped from a net balance of +17% in May, and is the lowest reading since July 2016.

In central London, the pace of decline in house price inflation continues, with 45% more respondents seeing a decline in prices over the month, while in the West Midlands and the North West, prices continue to rise and net balances of +33% and +28% respectively were reported.

Yesterday the latest Halifax House Price Index suggested that weakness in the capital had contributed to the slowest annual rise in UK house prices since the beginning of 2013.

Meanwhile, some 44% of contributors to the RICS survey identified domestic political uncertainty as the biggest factor explaining the current state of the market.

This compares to 27% who highlighted Brexit as the most important factor influencing the picture.

In London, the political climate, Brexit and the changes in stamp duty were equally citied as contributing to the lethargy.

In terms of overall activity and transaction levels, respondents again saw a decline in newly agreed sales in June, with 5% more respondents seeing a fall in sales over the month.

New instructions fell again and for the sixteenth month in a row, with 19% more respondents seeing a fall rather than rise in property coming on to the market. 

Sales expectations over the next 12 months have slipped to their lowest level since the immediate aftermath of the referendum, with a net balance of +12%.

Simon Rubinsohn, RICS chief economist, said: “The latest results demonstrate the danger, however tempting, of talking about a single housing market across the country. RICS indicators particularly regarding the price trend are pointing towards an increasingly divergent picture.

“High-end prime properties may be seeing prices slipping back but, for good or ill, prices are continuing to move higher in many other segments of the market. Indeed, the disaggregated data suggests that this will continue to be the case over the coming months.

“Perhaps not surprisingly in the current environment, the term ‘uncertainty’ is featuring more heavily in the feedback we are receiving from professionals working in the sector. This seems to be exerting itself on transaction levels which are flatlining and may continue to do so for a while particularly given ongoing challenge presented by the low level of stock on the market.”