Brexit concerns continue to weigh on Britain's housing market

The average level of stock on estate agents' books plumbed a close to record low in March, yet prices continued to decline modestly even as new inquiries fell for an eighth consecutive month on the back of mounting concerns around Brexit, according to the Royal Institution of Chartered Surveyors.

Although average stock levels inched ahead to just over 42 properties per branch in March - up from just under 42 in February - the new buyer inquiries balance remained in negative territory at -27.

The latter did mark an improvement on February's level of -40 but it remained "weaker than at any other point between May 2011 and December 2018," Samuel Tombs, chief UK economist at Pantheon Macroeconomics said.

Indeed, at -30 for March, the new sales instructions balance was at its lowest level since the referendum, when it fell to -29.

RICS also revealed that a net -24% of surveyors reported a decline in house prices during the month, which was better than February's reading of -27% but still pointed to a "modest fall" in nationwide house prices over the next couple of quarters.

On past form, the headline house price balance was consistent with a 2% rate of decline in UK home prices year-on-year, Tombs said.

Surveyors from London and the South East of England reported the weakest sentiment regarding prices, with Scotland and Northern Ireland being the only regions that experienced sustained price growth over the last two months.

RICS' chief economist Simon Robinson said: "Brexit remains a major drag on activity in the market with anecdotal evidence pointing to potential buyers being reluctant to commit in the face of the heightened sense of uncertainty.

"Whether any deal provides the shift in mood music envisaged by many respondents to the survey remains to be seen but as things stand, there is little encouragement to be drawn from key RICS lead indicators."

Looking forward, 15% more surveyors expect house prices to be higher at the national level in a year's time.

Northern Ireland, Scotland and Wales were tapped to lead the way in terms of price growth over the next twelve months, while London and the South East were the only areas where prices were expected to continue falling.

Shore Capital analyst Robin Hardy said: "[In] recent months the overall picture for the UK on all measures has been flattered by a much stronger market climate in the 'non-English' markets in Wales, Scotland and Northern Ireland. While these markets remain better than England, they are now also slipping. This is relevant for the house builders as they build the vast majority of their new homes in England.

"Overall, the position for the house builders remains weak with pricing, the key driver of margins, trending down. The weak climate and the lack of closure on Brexit is likely to both exert pressure on margins and dampen demand in the all-important spring selling season, the by far the busiest period of new trade for the house builders."