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Brexit fears cause first September drop in house prices for nearly a decade

Written by: Mark Banham
The average asking price for houses in the UK has suffered is first September drop in just under a decade owing to continuing uncertainty surrounding Brexit. 

The UK’s political scene has led to hesitation from buyers and a reluctance from sellers to enter the market, according to leading property website Rightmove.

The average price of property coming to the market dropped by 0.2 percent, or £730 pounds, breaking a run of monthly price rises for the month of September since 2010. 

Miles Shipside, Rightmove director and housing market analyst, said that the UK had been living in the “jaws of uncertainty” since the referendum more than three years ago. He added that as the UK reached yet another deadline, with uncertainty on whether it would leave on 31 October, this was causing some to hesitate in making property purchasing decisions and that there was an “increasing gnashing of teeth”.

“The autumn bounce normally kicks off at the same time as kids go back to school, but this year it’s a late starter at best, and if uncertainty persists then the autumn term could be missed altogether and its activities be delayed until the new year.

“Those who are planning to buy or trade up, and can keep their nerve whilst others hesitate, may find that they are in a stronger negotiating position to get a favourable deal.”

The number of sales agreed is down in September in all regions compared to the same period a year ago, indicating that there was a widespread hesitation rather than being restricted to some geographic areas. 

Rightmove said that a 5.5 per cent national drop was a marked contrast and large turnaround to the 6.1 per cent agreed sales flurry that was reported a month ago by the company.

Shipside added: “In August we reported a pre-Brexit buying spree with the number of sales agreed up by over six per cent compared to the prior year, as buyers and sellers decided to get deals secured well before the next Brexit deadline. A month later, as the deadline gets closer and tensions heighten, there has been a big swing the other way with sales agreed numbers now more than five per cent below those of a year ago.”

The number of newly-marketed properties dropped by 7.8 per cent in September compared to the same period a year ago, again with all regions down on the prior year. This was influenced by the London market, where there was a drop of more than 20 per cent in new properties coming to market as owners await a Brexit outcome and market recovery.

While the average annual rate of price increases drops to just 0.2 per cent, this was buoyed by the north and dragged down by parts of the south. London has properties now coming to the market at an average of 2.1 per cent cheaper than a year ago, with the South East region in negative territory at minus 1.1 per cent.

All other regions saw new seller asking prices rise compared to a year ago, with the North West the most buoyant, up 3.5 per cent.

Jeremy Leaf, an estate agent, said: “This data is not surprising in view of continuing uncertainty but it is disappointing that we are seeing so little improvement at a time when we might have expected more of a seasonal pick-up.

“Buyers and sellers remain cautious for understandable reasons. However, there are signs that the market is not in terminal decline with sales being agreed at more realistic levels and some people taking a longer-term view.”

Last Monday, the accountancy firm KPMG warned that UK house prices could dive by as much as 6 per cent if prime minister Boris Johnson crashed Britain out of the EU with a “no deal” Brexit. The company said that in that scenario, the largest falls would be in London and Northern Ireland. 

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