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Brexit uncertainty taking toll on property market, experts say

The Guardian logo The Guardian 10/10/2018 Patrick Collinson

For sale signs: RICS said the downward pressure on prices in London had spread out of the capital. © PA RICS said the downward pressure on prices in London had spread out of the capital. Brexit uncertainty has crushed confidence in the property market, according to the official surveyors’ body, with buyers evaporating, prices falling and sales taking a record amount of time to complete.

The Royal Institution of Chartered Surveyors (RICS) said the time taken to complete a property sale has widened to 19 weeks, the longest duration since it began collecting data.

It said the downward pressure on prices in London had spread out of the capital, and that “the already negative readings for the south-east and East Anglia deteriorated a little further in September”.

Surveyors across London and the south-east who took part in the RICS research were almost unanimous in blaming Brexit.

Simon Barker, a surveyor at the estate agency Knight Frank, said: “A no-deal Brexit will be a disaster for the property market.”. Michael Brooker, a surveyor and estate agent in Crowborough, East Sussex, said: “The Brexit effect is really depressing the sales market.”

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RICS measures sentiment in the property market rather than prices, and said that the net balance had fallen to -2% from +1% in August. It said its measure of inquiries from buyers fell to -11% from -9% the previous month.

Appraisals by surveyors before properties go on the market have slumped dramatically. “The level of appraisals being undertaken remains down on an annual comparison, with the net balance sitting at -20%. As such, there is nothing from this indicator to suggest a pick-up in sales listings is imminent,” said RICS.

Simon Rubinsohn, chief economist at RICS, said: “There are a number of themes running through the comments of respondents this month, but uncertainty relating to Brexit negotiations is at the very top of the list followed by references to the confidential remarks made by the Bank of England governor to the cabinet. All of this is, not surprisingly, taking its toll on the sales market.”

But outside of the south, Brexit uncertainty is having less of an impact. “House prices continue to rise firmly across much of the UK, with the West Midlands, Northern Ireland and Scotland posting the strongest growth,” said RICS.

Northern Ireland currently has the most vibrant property market in the UK, despite the fact that the border with the Irish Republic remains the thorniest issue for Brexit negotiators, and the province is without a government in Stormont. “The market has continued to be strong despite the dreaded word Brexit,” said Kirby O’Connor of the Belfast estate agents GOC.

The rental market across the UK has bucked the trend in the sales market, with demand rising for the fourth successive month, said RICS. It said that with new instructions from landlords down and tenant demand up, rents were likely to rise by about 2% this year and accelerate to 3.5% a year over the next five years, outstripping projected pay rises.

The RICS figures come just weeks after Halifax revealed that house prices had tumbled at the fastest pace for almost six months, and that the number of homes for sale had fallen to a decade low. Britain’s biggest mortgage lender said the average price of a home in Britain had dropped to £225,995 last month, down 1.4% from the level recorded in August. The price of a home remained 2.5% higher than a year ago.

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