Brexit to blame for housing market activity slump
New buyer enquiries, agreed sales and instructions all fell in February according to the latest Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS).
This is the sixth straight month in which all three measures have dropped.
RICS reported that 41 per cent more respondents reported a fall in new buyer enquiries, while 29 per cent of contributors reported a decline in new instructions over the month. This is the eighth consecutive month in which there has been a fall in new listings, with average stock levels now back to record lows.
RICS also questioned surveyors on how they felt Brexit was impacting the market. More than three-quarters of respondents suggested that the uncertainty surrounding leaving the EU was dampening activity in the market, causing buyers and sellers alike to sit tight.
Despite all of the negativity, RICS noted that the 12-month outlook from surveyors has remained broadly positive, which it suggests demonstrates the hope that greater clarity regarding the Brexit situation will emerge after March 29.
However, it pointed out that with the government’s proposed withdrawal agreement again being defeated in the House of Commons, irrespective of whether a deal is in place in time before the UK leaves the EU, the impact of further uncertainty will be felt across all tenures of the housing market.
Simon Rubinsohn, chief economist at RICS, said that with little sign that Brexit will be resolved any time soon, it could prove to be a “challenging” spring for both the housing market and the wider economy.
He continued: “It is clear from professionals working in the market that this environment requires a greater degree of realism from those looking to move. A reluctance from some vendors to acknowledge the shift in the balance of power in the market will compound the difficulty in executing transactions.”
Hew Edgar, head of policy (interim) at RICS, added that even with Brexit taken out of the equation there are “clear issues” that need to be tackled, including the lack of supply, a “disputable” stamp duty framework and a “faltering private rental sector (PRS) system”.