LONDON 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 closely watched survey of property valuers showed on Wednesday.
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.
The resilience of Britain’s housing market since the referendum decision to leave the European Union has confounded warnings from former finance minister George Osborne of a sharp fall in prices if the country voted to leave the bloc.
RICS’s headline house price balance slowed to +24 in December, its first fall since July, from November’s seven-month high of +29. That was a bigger drop than any of the forecasts in a Reuters poll of economists although it still reflected solid price rises.
Gains were strongest in northwest England. Central London, where prices have fallen for 10 months due to concerns about Britain’s exit from the European Union 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 around the time of the Brexit referendum. 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 government is due to publish plans to boost house-building in the next few weeks, but 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.
But consumers are now reporting a greater squeeze on their disposable income as inflation starts to pick up after a near 20 percent fall in the value of sterling since the referendum.
Leading mortgage lenders Lloyds Banking Group and Nationwide Building Society predict house price growth will slow this year to roughly 2 percent, compared with an official price rise of 6.7 percent in the 12 months to November.
(Reporting by David Milliken; Editing by William Schomberg)