Cyber Monday Deal: Up to 60% off InvestingProCLAIM SALE

UK house prices set for first fall since 2012 as EU vote weighs - RICS

Published 09/06/2016, 07:13
© Reuters. Estate agents boards outside houses in south London

By David Milliken

LONDON, June 9 (Reuters) - British house prices are set for their first fall in nearly four years over the next few months as the European Union referendum and a new tax on landlords turn buyers away, property valuers said on Thursday.

For the first time since November 2012, a majority of members polled by the Royal Institution of Chartered Surveyors said prices over the next three months were expected to fall, though most still saw an increase over a 12-month horizon.

Britain votes on June 23 on whether to stay in the EU and finance minister George Osborne warned homeowners last month that house prices could drop by more than 10 percent after a "Leave" vote.

RICS chief economist Simon Rubinsohn said that for now, the group's members were only forecasting a temporary dip in prices, which have surged by as much as a third in the past five years.

"There is not, at this point, a sense that a fundamental shift is taking place," he added.

As well as the uncertainty about Britain's place in the EU, demand has been hit by the introduction in April of a new tax on buy-to-let properties and second homes which prompted a surge of buying interest earlier in 2016.

For many Britons, their home is their largest asset, and a strong increase prices in recent years has helped to spur consumer spending. But for others who do not own their home, years of housing costs rising faster than wages have squeezed their spending power.

RICS said its headline house price balance for changes over the previous three months fell to its lowest since February 2015 at +19 for May, down from +39 in April and below all forecasts in a Reuters poll of economists.

Sales dropped at the fastest rate since August 2008, and new buyer inquiries declined at the sharpest pace since June 2008.

Other measures of the property market have also pointed to a slowdown. Earlier this month the Bank of England said net mortgage lending in April was the lowest since 2012.

RICS said much of the decline in prices and other measures was led by London, a market that attracts greater foreign and investor interest than elsewhere in Britain.

Prices last fell across the United Kingdom as a whole in the three months to November 2012 according to figures from mortgage lenders Halifax. In the three months to May, they were up 9.2 percent on a year earlier.

RICS said its members expected prices to rise by slightly more than 4 percent a year over the next five years.

© Reuters. Estate agents boards outside houses in south London

A Reuters poll of economists on Wednesday showed that on average they expect prices to rise 5.0 percent this year and 4.1 percent in 2017 if Britain stays in the EU, but for growth to slow to 3.8 percent and then zero if the country leaves.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.