The looming threat of Brexit has dragged down the UK property market further, with prices falling at the fastest rate in six years and the outlook for sales the weakest in two decades, according to Britain’s surveyors.
The Royal Institution of Chartered Surveyors (Rics) said the number of inquiries, agreed sales and new instructions all declined in December.
Sales expectations for the next three months were the lowest since the survey began in 1999, with a balance of -28% – the difference between the number of respondents anticipating increases and the number expecting decreases.
Sales expectations were either flat or negative in every region of the UK for the period from January to March, when the UK is scheduled to leave the EU.
Separate government figures showed house prices falling for the third month in a row in November. The data prompted the EY Item Club – an economic forecasting group that bases its work on the Treasury’s economic model – to warn that house prices could fall by up to 5% this year if the UK crashes out of the EU without an agreement. The Item Club said that if the UK leaves with a deal, prices could rise 2% over 2019.
Many surveyors and estate agents interviewed by Rics described the market in December as “very quiet”, with the usual dip before Christmas exacerbated by Brexit uncertainty.
David Knights of David Brown & Co in Ipswich said: “One of the quietest Decembers for many years, with very few inspections, viewings or sales.”
Mark Wiggin of Strutt and Parker in Ludlow said a number of clients had withdrawn from the market because of Brexit.
Quentin Jackson-Stops of the eponymous agency in Northampton said: “Brexit is a cloud overhanging the market and its impact cannot be underestimated. Uncertainty is causing the declining number of property transactions.”
The Rics measure of prices dropped for the fourth month, deeper into negative territory, to -19% from -11%; marking the lowest reading since August 2012. The 12-month outlook for prices remains broadly flat.
The surveyors body also highlighted the lack of supply and affordability, with stock levels and buyer interest declining further in December. Estate agents have an average of 42 properties on their books per branch, close to record lows.
According to the latest data from the Land Registry and Office for National Statistics, the average price of a property in the UK dipped 0.1% in November from the previous month to £230,630 after declines of 0.4% in October and 0.3% in September. That left the annual growth rate at 2.8% in November, slightly up on the 2.7% recorded in October, which had been the weakest since July 2013.
The West Midlands posted the strongest annual growth in house prices in November, up 4.6%, although prices fell 0.4% on the month, to £197,387.
Property values in London fell 1.2% month on month and dropped 0.7% on a year ago – the only region with an annual price decline.
Separate data from the property website Rightmove showed rent levels continuing to rise. Average asking rents in London hit an all-time high of £2,034 in the fourth quarter of 2018 as the number of available properties dwindled . Compared with a year earlier, the number of properties available to rent is down 22%.
Rightmove is predicting that asking rents will rise 4% in London this year and by 3% outside the capital.
Outside London, places in the north-west have had the biggest demand from tenants, such as Bootle, Runcorn and Birkenhead.