Brexit worries hurt buyer interest in UK housing market in June

Buyer interest in the housing market fell significantly across the UK after Britain’s decision to leave the European Union on 24 June, a survey revealed on Thursday.

The Royal Institution of Chartered Surveyors (RICS) said uncertainty surrounding the EU referendum resulted in a market drop in activity in June.

The RICS headline price balance fell to +16% in June from +19% a month earlier, although it was better than the +10% expected by economists.

New buyer enquiries declined with the headline nation net balance coming in at -36%, the third consecutive month of falls and the lowest reading since mid-2008. The south of England saw the sharpest drop in demand with 58% more surveyors in London seeing a decrease in buyer interest.

The supply of properties available for sale also fell across all areas in the UK, expect Northern Ireland.

Agreed sales fell with a net balance of 35% of reporting a slide in transactions due to sluggish demand and a continued shortage of properties on the market.

Expectations of future sales declined at the fastest pace since records began in 1998 with 26% more respondents anticipating a further drop in sales across the UK over the next three months. The survey said there were 12% more respondents foreseeing a fall in transactions in the next year.

Price growth expectations have also softened with 14% of respondents projecting growth in the next five years, compared to 20% in May. London remained the only region where respondents predict prices will dip, mainly in the central zones.

“Big events such as elections typically do unsettle markets so it is no surprise that the EU referendum has been associated with a downturn in activity,” said RICS chief economist Simon Rubinsohn.

“However, even without the build up to the vote and subsequent decision in favour of Brexit, it is likely that the housing numbers would have slowed during the second quarter of the year, following the rush in many parts of the country from buy to let investors to secure purchases ahead of the tax changes.”

The government introduced higher stamp duty on second homes and buy-to-let properties in April, which caused a flurry of buyers hurrying to make purchases ahead of the changes.