Despite the short-term slowdown in property prices, the longer term outlook looks more positive.
House price growth slipped to a three-year low in July 2016 with the UK’s decision to leave the EU cited as the main cause for the market slowdown, according to a new poll of surveyors.
The survey, conducted by the Royal Institution of Chartered Surveyors (RICS), shows that residential property price growth slowed sharply in the three months to the end of July, along with new buyer inquiries, property sales and new instructions.
Only 5% more of those surveyed saw a rise rather than a fall in home prices across the UK, while forecasts for house price growth in the next three months remains negative across the country.
Surveyors generally expect property prices to turn mildly negative across the country in the next three months. But despite the short-term slowdown, the outlook for the next 12 months is slightly more positive according to those polled, which acts as a rather good indicator of future house price changes, with almost a quarter of respondents to the study expecting prices to rise over the next year, compared to last month’s survey which put that figure at zero.
Most areas of the UK, with the exception of London and East Anglia, are forecast to see home price growth in the coming 12 months as the continuing shortage of homes is likely to support higher property prices as the market looks set to take off again.
Looking further ahead, RICS estimate that the average price of a home in the UK will rise by 3% per annum over the next five years, with property prices in London set to outstrip the national average with growth of 4% over the same period.
Given that property price growth was always likely to slow following the outcome of the EU referendum, the survey suggests that confidence in the UK housing market is actually more resilient than might have been anticipated, supported in part by even cheaper mortgage borrowing rates following last week’s interest rate cut.