House prices to stagnate amid Brexit fears
The housing market is predicted to stall in 2019 as Brexit fears, prospective interest rate rises and affordability constraints begin to bite, according to a new report.
The Royal Institution of Chartered Surveyors (Rics) said property sales had declined in the past two years and the number of house sales is set to remain well below the 1.7million high reached in 2006 as we head into the new year.
The RICS Housing Forecast 2019 suggests house price growth will grind to a halt in the second half of next year, although they do predict London and the south-east are likely to “pull back” slightly.
The stagnation in the market is underpinned by a lack of housing stock – there is simply not enough properties up for sale to replenish those sold with average stock levels at a near all-time record low according to RICS’ figures.
Almost half of agents surveyed reported the number of market appraisals undertaken in November was down on 2017, which suggests any marked increase in supply across the market in the coming months was “unlikely”.
This is further compounded by a slowdown in new build growth, which has fallen short of targets and left a shortfall in housing stock.
Tarrant Parsons, RICS Economist comments: “Demand has tailed off over recent months, with Brexit uncertainty causing greater hesitancy as the withdrawal deadline draws closer. That said, the current political environment is far from the only obstacle hindering activity with a shortage of stock continuing to present buyers with limited choice, while stretched affordability is pricing many people out.”
“It’s not all bad news for the outlook, however, as sentiment could be lifted if a deal were to be reached on the withdrawal agreement before too long. Furthermore, mortgage rates are set to remain favourable, with any changes in monetary policy expected to be minimal over the next twelve months.”
Hew Edgar, RICS Head of Policy, adds: “We would hope that uncertainty around Brexit will be resolved toward the beginning of 2019, allowing for fluidity to start to return to the housing market. However, there are a number of domestic hurdles to overcome, such as a lack of supply, labour shortages, and the infrastructure deficit, amid increasing material costs.”
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