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‘Never-ending Brexit saga’ casting shadow over housing market ‒ RICS

Written by: John Fitzsimons
Sales expectations have fallen in the residential housing market as ongoing uncertainty over Brexit continues to bite, the Royal Institution of Chartered Surveyors (RICS) latest survey has shown.

Sales expectations for the coming three months fell from a net balance of -4 per cent in July to -23 per cent in August — the worst result since February.

The August 2019 RICS Residential Market Survey noted that sales expectations had weakened in almost every part of the UK over the last two months, with positivity having “leaked out of the market”.

Demand from new buyers was unmoved, with newly agreed sales dropping from a net balance of -6 per cent last month to -8 per cent in August.

New instructions were also flat, marking the third straight month in which there has been little or no change in the number of homes coming onto the market.

Prices were expected to fall in the next three months, but surveyors remained positive about longer-term prospects. A net balance of 12 per cent of respondents anticipated house price increases.

For lettings, tenant demand rose for the eighth straight month, with a net balance of 23 per cent of respondents noting an increase. However, landlord instructions continued to drop, a trend which RICS believes has been going on since 2016. As a result, it expected to see rents “squeezed higher” over the next quarter.

Simon Rubinsohn, chief economist of RICS, said it is hard to get away from the “shadow being cast over the housing market by the seemingly never-ending Brexit saga”.

He added: “That said, the key RICS activity indicators have actually remained relatively resilient until now and point to only a modest dip in transactions across the country rather than anything more severe.”

More resilience than we dared hope for

Jeremy Leaf, former residential chairman of RICS, said that while these figures are disappointing they are not that different from what is generally expected for August.

He continued: “On the ground, we have seen plenty of caution and many buyers and sellers sitting on their hands. However, longer-term buyers of smaller houses have been looking beyond Brexit and taking on view on likely price movements.”

Leaf added that the market had shown more resilience than he might have dared hope for, noting “we are not finding buyers and sellers withdrawing from transactions because of worries about an imminent market correction”.

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