Weak UK homes market

Britain’s housing market had its weakest month since just after June’s Brexit vote in December as house price growth slowed and the number of homes sold fell slightly, a survey of property valuers showed yesterday.

The Royal Institution of Chartered Surveyors said its members expected a further slowdown in price rises over the next three months, although a clear majority thought prices in 2017 would be higher than last year.

Gains were strongest in northwest England. Central London, where prices have fallen for 10 months due to concerns about Brexit and higher tax on expensive properties, was the only region to see a decline.

RICS chief economist Simon Rubinsohn said a shortage of properties for sale was creating a vicious cycle.

Existing homeowners were reluctant to move because of the poor choice on offer and high cost of buying a larger home.

“A familiar story relating to supply continues to drive both the sales and letting markets, impacting on activity, prices and rents,” he said.

A narrow majority of surveyors reported a fall in the number of sales for the first time since a big drop-off in June. The proportion expecting sales to pick up in early 2017 fell sharply.

“It remains to be seen whether or not this is a temporary setback or the onset of a weaker trend,” RICS said. Some of its members in Scotland and London reported concern about Brexit hurting the market.

The UK government is due to publish plans to boost house-building in the next few weeks, but Mr Rubinsohn said it was unlikely to end the housing shortage fast. Britain’s economy expanded much faster than most economists expected in the six months after June’s Brexit vote.

Lloyds Banking Group and Nationwide Building Society predict house price growth will slow this year to roughly 2%, compared with an official price rise of 6.7% in the year to November.

Meanwhile, property developer British Land reported only a slight decline in occupancy rate in the third quarter, adding to signs that property demand from companies continues to hold up.

Britain’s second-largest publicly listed property developer reported an occupancy rate of 97% with a weighted average lease length of 8 years in the three months to the end of December. British Land’s shares have lost 19% since the Brexit vote.

Reuters