Property values dropped for the fourth month in a row in January as buyers stayed away from the housing market.
Housing market activity fell sharply in January as Brexit uncertainty continued to hit sentiment.
Property values dropped for the fourth month in a row, while estate agents reported further declines in buyer enquiries, sales and new instructions, according to the Royal Institution of Chartered Surveyors (RICS).
The number of buyers looking to purchase a home slid for the sixth consecutive month to hit its lowest level for more than a decade.
Meanwhile, new sales instructions recorded their weakest reading since July 2016, and the pace at which agreed sales fell accelerated.
There also appeared to be little prospect of a turnaround in the short term, with more estate agents expecting prices to fall in the coming three months than at any time since March 2009, when the market was in the tail-end of a price correction.
Why is this happening?
Uncertainty over the terms and timing of the UK’s exit from the EU continues to be the main factor holding back the property market.
But RICS warned that affordability was also a factor, particularly in southern regions which have seen strong house price growth in recent years.
Simon Rubinsohn, RICS chief economist, said: “Resolution of the Brexit negotiations is widely seen as critical to encouraging potential buyers back into the market, although whether that will be sufficient in London and parts of the South East where affordability remains stretched and the tax changes are most penal remains to be seen.”
How do the regions compare?
Falling buyer demand impacted nearly every region of the UK in January, with Scotland the only place not to post a drop, although even here, new buyer enquiries were flat.
Northern Ireland and Scotland were the only regions in which estate agents continued to report increases in property values.
What’s the background?
While the outlook for the housing market continued to be bleak, the letting market was more buoyant.
Tenant demand rose modestly between November and January, marking the third successive quarter during which it has increased.
But the supply of rental homes moved in the other direction, with new landlord instructions falling for the 11th consecutive quarter, as investors continue to respond to tax and regulatory changes.
Unsurprisingly, this mismatch between supply and demand led letting agents to predict rents will increase.
The cost of being a tenant is expected to rise by 2% during the coming 12 months, and by an average of 3% per annum over the next three years.
Top three takeaways
- Housing market activity fell sharply in January as Brexit uncertainty continued to hit sentiment
- Property values dropped for the fourth month in a row, while estate agents reported further declines in buyer enquiries, sales and new instructions
- More estate agents expect prices to fall in the coming three months than at any time since March 2009, when the market was in the tail-end of a price correction
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