House prices expected to ease ahead of Brexit vote, RICS survey shows

Britain’s housing market is expected to ease in the lead up to the 23 June referendum on the nation’s European Union membership, a survey revealed on Thursday.

The Royal Institute of Chartered Surveyors said its members predict price growth for the next three months will fall to the slowest pace in almost a year.

The survey’s monthly house price balance dropped to a nine-month low of +42 last month from +50 in February, surprising analysts who had expected no change to the reading.

Concerns about the impact a vote to leave the EU may have on the UK property market and the economy is likely to weaken short-term confidence, RICS highlighted.

“Elections inevitably bring with them periods of uncertainty in the market, and our figures would suggest that next May’s devolved elections are no exception. Likewise, the EU referendum, is likely to be an influencer in terms of the damper outlook for London in particular,” said Simon Rubinsohn, chief economist at RICS.

“However, all indications suggest that whatever the outcome of the forthcoming elections and referendum, in the long-term, the imbalance between demand and supply will still exert a strong influence on the market, with house prices expected to rise by close to 25% over the next five years."

Rubinsohn also noted that the mad rush of second home and buy-to-let purchases ahead of higher taxes in April is over so the market is starting to slow as a result.

From 1 April, buy-to-let investors and second homeowners must pay an extra 3% stamp duty on new purchases compared with first-time buyers.

RICS's index for price increases over the next three months was +17 in March compared to +21 in February. It marked the lowest reading since April 2015, which was a month before the national election when polls suggested the Labour Party had a strong chance of winning and bringing in higher taxes to curb the housing market.

Central London in particular is expected to be affected over the next three months with 38% more respondents saying they see house prices falling.

However, the longer-term outlook by RICS members indicates that prices in London will grow by 3% each year over the next five years. Across England and Wales, prices are expected to rise by more than 4% each year for the same period.