UK property market bounces back, except in London

Surveyors expect house prices and sales to increase in the coming months following a drop in confidence after the EU referendum, according to a survey from the Royal Institution of Chartered Surveyors.

UK property market bounces back September 2016
The UK property market appears to be bouncing back after a plunge in confidence following the EU referendum, according to the latest survey from the Royal Institution of Chartered Surveyors (Rics).Across most of the country – with the notable exception of London – a balance of surveyors expect both house prices and sales to pick up further in the coming months. For the sixth month in row, though, more surveyors in the capital reported prices falling rather than rising in August.Elsewhere, a balance of 12 per cent of surveyors said house prices rose rather than fell in August, an increase from only five per cent in July. East Anglia and the West Midlands recorded the strongest growth, with balances of 30 per cent and 22 per cent reporting rising prices.Overall, surveyors predicted an annual price rises of 3.3 per cent over the next five years, slightly down from the four per cent they were forecasting at the start of the year. Simon Rubinsohn, Rics chief economist, said, "There are clear signs that the housing market is settling down after the initial surprise of the outcome to the EU referendum. It is likely the swift response from the Bank of England, both in terms of the lowering of the capital buffer and the cut in interest rates, has played a role in helping to support confidence."Buyer enquiries did dip again in August but only modestly and, more significantly, sales expectations are beginning to edge upwards once again."The more assured mood is also reflected in some of the longer term Rics indicators, although this in itself could serve to reignite ongoing concerns surrounding affordability with five-year projections for both prices and rents in the latest survey back to their highest level since May." 

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Lucian Cook, UK director of residential research at property firm Savills, commented, “After the initial shock response, the Rics survey suggests a slowing of house price growth rather than anything more dramatic, and now points to more modest falls in new buyer enquires than were initially shown. “Incredibly low borrowing costs have undoubtedly contributed to this more benign picture, but much will now depend on how buyer sentiment ebbs and flows as negotiations to leave the EU progress and their likely impact on the wider economy.”Hansen Lu, property economist at Capital Economics, added, “With buyer numbers still falling and confidence still shaky, the weakness in transactions will last for several months yet, while house price growth will continue to ease. But with the recent economic news taking a more positive tone, it looks increasingly likely that the housing market will avoid catastrophe.”Rics said there remained a real shortage of property for sale that "looks set to persist for a while yet" and that would continue to prop up asking prices. During August – traditionally a slow month for the market – surveyors reported that average stock levels were close to a record low.Brian Murphy, from the Mortgage Advice Bureau, said, "Whilst the survey is based on sentiment rather than hard data, this provides us with a good temperature check in terms of what surveyors up and down the country are observing."This is in line with other data released from lenders such as the Halifax, which supports the same point of view that, after a deep intake of breath in June and allowing for the traditionally quieter summer hiatus, the overall market picture for most of the UK is stable with the continued lack of supply being the underlying factor that is likely to underpin the market in the months to come."

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