UK house buyers adopt wait and see approach after Brexit vote

The number of people looking to buy houses in the UK in May fell to a three-year low amid uncertainty over the outcome of the referendum on European Union membership, the National Association of Estate Agents (NAEA) has reported.

UK houses
There has, however, been a post-referendum "spike in enquiries from overseas" about purchasing property in the UK, London in particular, said NAEA London representative Jonathan Hudson, who runs property agency Hudsons in central London.The estate agents' report came as the Nationwide house price survey for June showed that, across the UK, the average house price rose to £204,968 in June, 0.2 per cent higher than the previous month and representing an annual rate of 5.1 per cent.Jeremy Leaf, a former chairman of the Royal Institution of Chartered Surveyors (RICS) and a north London estate agent, said the figures were "surprisingly strong", given that they represented a period of uncertainty prior to the referendum."They show that the market is more resilient than we might have expected," he said. "On the ground, we are seeing a determination on the part of most customers to get back to as close to normality as possible but a fall-off in transactions seems inevitable as buyers and sellers pause awaiting definite signs of change in the market."Robert Gardner, chief economist at Nationwide, said the economic uncertainty after the Brexit vote – plus the recent stamp duty increase on buy-to-let investors – made it hard to predict what would happen to house prices in the months ahead."Ultimately, conditions in the housing market will be determined by conditions in the wider economy, especially the labour market," he said."It is too early to assess the impact of the referendum vote on the economy. However, it is encouraging that the labour market had remained robust in recent months, with solid employment growth and the unemployment rate declining to an 11-year low in April. Borrowing costs also remained close to historic lows."Moreover, the lack of homes on the market – with estate agents continuing to report a record low number of properties on their books – will also provide underlying support for prices even if demand softens."Alex Gosling, chief executive of online estate agents HouseSimple, commented, "We work up last Friday to a different world (after the referendum vote) and, not surprisingly, the global stock markets went into a tailspin. But looking at June house price figures you'd think all is rosy in the world, with a small rise in average prices up to record levels."However, it does feel like the calm before the storm. Just how violent that storm is going to be is like most things at the moment – uncertain. It may be a short-term blip or it could be 2008 all over again if you listen to the doom-mongers. The truth is, no-one really knows."If the labour market remains robust and lending conditions don't deteriorate, then there's no reason to think we can't navigate through these choppy waters. Any drop in purchases in the shorter term will be counter-balanced by the continued lack of supply, which should prop up prices. How London fares could be crucial to the longer term health of the housing market."Jonathan Hopper, managing director of the buying agents Garrington Property Finders, added, “Nationwide’s June data gives a snapshot of the housing market immediately before the Brexit referendum. It shows a functioning market with decent price growth but limited supply – a languid calm before the storm.“Unfortunately, this data is about as much use in predicting the future course of the property market as sun-dappled photos of the summer of 1914. It's a historical record of a lost age before Europe changed forever. The referendum result has since plunged the property market into a ‘hard reset’, especially in the higher price brackets.“While we can’t be sure how much things will slow, it’s inevitable that more nervous investors will sit on their hands while the opportunists circle. Prime central London – where most property purchases are discretionary – is the most exposed to such confidence-sapping doubts.“Outside London the impact will be less dramatic, but the uncertainty will do little to unblock the supply shortage. Would-be sellers will be more likely to stay put, and this tightening of supply may prop up prices to a degree.“All this points to a soft landing rather than a crash, but the uncertainty is such that normal rules have been suspended. What is clear that the brisk, 5.1 per cent rate of average annual price growth the Nationwide recorded in June is likely to be the high water mark for the property market for some time to come.”

Read analysis of what the vote to leave the EU may mean for for the global mobility industry in Brexit is a reality – a new era for global mobility? by Relocate Global's managing editor, Fiona Murchie.

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