The property market remained firm in northern regions but sales levels slid further in southern ones.
Property values in Northern Ireland increased for the 60th consecutive month, while strong gains were also recorded in Scotland, according to the Royal Institution of Chartered Surveyors (RICS).
The weakness in these regions cancelled out activity in other areas, leading to no change in house prices at a headline level and the biggest fall in property sales recorded for five months across the UK as a whole.
Why is this happening?
The slowdown in the London market has spread to the surrounding regions.
Strong house price growth in the south has led to affordability becoming stretched, making it harder for people to get on to the property ladder or trade up it, leading to subdued levels of sales.
But property in Scotland and Northern Ireland, as well as some northern regions of England, remains much more affordable.
As result, activity in these markets is correspondingly higher.
Above: Three-bedroom cottage for sale in near Tewkesbury, Gloucestershire
Who does it affect?
While the housing market is stronger in northern regions than southern ones, there is still a marked reluctance among many people to move home.
The number of homes on estate agents’ books remains close to record lows, and across the UK as a whole, estate agents reported a fall in new properties being put up for sale.
Demand from potential buyers was also flat in the wake of the Bank of England’s interest rate hike and ongoing uncertainty about the economy and Brexit.
Northern Ireland and Yorkshire and Humberside were the only regions that bucked this trend, with a rise in new buyers registering with estate agents.
What’s the background?
Positive momentum is expected to continue in Scotland and Northern Ireland for the rest of the year.
But the regional divergence will persist, with the current weakness in London and the south east expected to spread to the south west.
Simon Rubinsohn, RICS chief economist, said: “In many parts of the country the housing market actually remains quite firm.
“While a combination of a lack of stock and some level of uncertainty, both relating to the interest rate outlook and Brexit, has had an impact on activity, the overall picture in these areas is still encouraging.”
He added that it was important that the slowdown in London and the south east was not seen as being indicative of the wider market.
Top 3 takeaways
- The UK housing market continued to diverge in August
- Strong house price growth was recorded in Scotland and Northern Ireland
- But estate agents were downbeat about London, the south east and East Anglia, with sales levels remaining subdued