UK Economy

UK housing market activity ebbs after EU referendum - RICS survey

LONDON - British housing market activity ebbed the month following the vote to leave the European Union, with gauges of house price growth and transactions falling to the lowest level in years, a survey showed on Thursday.

Painted property fronts are seen in a residential street in London, Britain, January 29, 2016. REUTERS/Toby Melville/File Photo

The Royal Institution of Chartered Surveyors said its members cited uncertainty following the June 23 referendum and tax changes as the main reasons for the slowdown - but some said activity had started to improve after an initial wobble.

Its headline price balance - a leading indicator of other house price indexes - fell to +5 in July from +15 in June, its lowest level since April 2013. House price declines were most acute in London, although the pace eased a little from June.

Overall property transactions declined at the same pace as in June, marking the weakest two months since mid-2008. RICS said a severe shortage of property coming to the market could yet weigh further on the market.

Last week Bank of England Governor Mark Carney highlighted signs that the housing market was weakening after the central bank cut interest rates to a new record low and launched a stimulus package that could add up to 170 billion pounds ($222 billion) to the financial system.

“The housing market is currently balancing a raft of somewhat mixed economic news alongside the latest policy measures announced by the Bank of England, which have already begun to lower cost of mortgage finance,” said Simon Rubinsohn, RICS’ chief economist.

“Against this backdrop, it is not altogether surprising that near term activity measures remain relatively flat.

A rebound in July price expectations for the year ahead could signal that confidence is more robust than suggested in the previous month’s survey, Rubinsohn added.

RICS’ balance of expected sales in the next three months recovered to -2 from a record low of -26 in the previous month’s survey.

(Reporting by Andy Bruce; Editing by Ana Nicolaci da Costa)