The prospect of an impending Brexit and a snap general election before year’s end spooked the housing market in October, according to a new UK Residential Market Survey by the Royal Institute of Chartered Surveyors (RICS).
Sales remained subdued, while new buyer enquiries, agreed sales and new instructions indicators showed a negative trend. However, RICS added that near-term sales expectations for the next three months improved slightly, suggesting the potential for a post-election bounce back.
Politics roils the markets
Barely seven months after the UK’s original intended EU withdrawal date, the housing market found itself waiting in anticipation of an outcome last month, which resulted in yet another delay to Brexit, and the eventual calling of a snap election, mere days before month’s end.
This last-minute uncertainty had a marked impact on enquiries from new buyers. RICS estimated that this metric declined for the second month in a row in October, giving a net balance of -16 per cent from respondents, suggesting a decline.
Agreed sales also slipped during the last month in all regions of the UK, except Northern Ireland, which saw a slight increase.
House price inflation was estimated to have remained broadly flat according to RICS, giving a net balance of minus five per cent from respondents. This suggested that prices would be marginally lower in the near-term. However, RICS added that its three-month sales outlook was more upbeat.
Expectations for the next 12 months also showed signs of improvement, with a positive net balance of 23 per cent of respondents believing sales would improve. This suggests that much of the subdued activity is a result of the sheer uncertainty about political developments.
Housing market in a holding pattern
Simon Rubisohn, chief economist at RICS, explained the survey findings, saying: “The latest survey feedback continues to suggest that both buyer and seller activity remains in a holding pattern, hampered by political and economic uncertainty.”
RICS also addressed the government’s responsibility for much of the weak sentiment, referring to a number of regulatory changes in the private rented sector (PRS).
Tamara Hooper, policy manager at RICS, added: “Persistent government meddling in the PRS dampened landlords’ appetites to invest and expand their portfolios, with many consolidating assets, or leaving the sector altogether. In addition, the regular changes to the PRS regime have decreased stability and standards for tenants.”
The government’s record on the PRS is just one of the issues Prime Minister Boris Johnson faces, as the general election campaign intensifies. On Tuesday 19th November, Mr Johnson faced Labour leader Jeremy Corbyn in a live head-to-head televised election debate.
Much of the debate revolved around Brexit, but the Conservative Party Press Office soon found itself facing criticism from all directions, following its decision to briefly rebrand its Twitter page as “factcheckUK” during the debate.
Independent factchecking charity FullFact described the action as “inappropriate and misleading”, urging the public not to mistake it for a genuine independent factchecking service.