Property prices in most of the United Kingdom, which is at their weakest since September 2012, are projected to continue falling in formerly hotspot markets over the next three months. And the cause of this lingering malady -- Brexit.
This demoralizing piece of news for sellers - but a welcome one for the few buyers out there - was made public by The Royal Institution of Chartered Surveyors (RICS) in its monthly survey of members. This much-awaited report presents the dismaying information the UK property market is at its weakest in six years.
Property prices remain stagnant or are falling across half the country. RICS said property sales will remain "in limbo" until a Brexit deal is done. It noted prices are falling in London, the southeast, southwest and East Anglia. London has consistently ranked among the top five cities in the world with the most expensive real estate.
RICS expect prices will continue falling in these parts of the country for the next three months. It also forecasts prices to remain flat nationwide over the next 12 months, or until October 2019.
Equally unwanted is the news transaction activity has almost evaporated because buyers refuse to close deals until there is some sort of certainty over Brexit. RICS' members note Brexit is the big issue and is massively affecting buyer confidence. Outside London, the impact and uncertainty created by Brexit are also contributing to falling markets.
The uncertainty about the country's economic outlook worsened by the everlasting Brexit negotiations has become a key drag on market sentiment, said, economists.
The RICS' findings came a few hours after Halifax, Britain's biggest mortgage lender, said annual house price growth dropped to 1.5 percent, its lowest rate in more than five years. Prices have slowed to a virtual halt, and rose a scant 0.2 percent quarter-to-quarter.
A report from an upmarket bank and wealth adviser Coutts and Co revealed prices have plummeted 14.7% from their peak in 2014. Worse, transaction activity had fallen by about a third.
RICS also reports that rents have begun to increase despite the slowdown in the residential sales market. It said there had been a modest improvement in tenant demand during the three months to October. It also noted landlords were selling up to avoid new buy-to-let taxation.
RICS predicts only small rent increases while demand is rising and supply is falling. Data shows rental demand has risen 13.3 percent over the past year while rental stock fell 6.9 percent.
In September, sellers began to accept the fact there are now fewer buyers, and today's house hunters are making more demands of vendors because of the softer market. An indicator is a difference between asking and selling prices. This stands at 10 percent in central London, while it's fallen to 2.5 percent in Manchester and Birmingham.
