Surveyors predict a further decline in activity over the next three months, the August 2019 RICS Residential Market Survey has revealed.
Brexit uncertainty is a significant factor in causing buyers and sellers to hesitate.
Simon Rubinsohn, RICS chief economist, said: “It is hard to get away from the shadow being cast over the housing market by the seemingly never-ending Brexit saga.
“Indeed, uncertainty is a theme that respondents continue to highlight as a negative influence on sentiment in survey after survey.
“That said, the key RICS activity indicators have actually remained relatively resilient until now pointing to only a modest dip in transactions across the country rather than anything more severe.
“More ominously, the August RICS results again draw attention to the challenge in the lettings market, with feedback continuing to indicate that demand is outstripping supply.
“As a result, the pressure is for rents to continue moving higher and indeed outstripping any price gains both in the near and medium term.”
Near term sales expectations fell from a net balance of -4% to -23%, representing the poorest return since February this year.
Furthermore, sales expectations have weakened in almost all parts of the UK over the past two months. Things are expected to improve, albeit only very modestly, at the 12-month horizon.
As positivity has leaked out of the market, August also saw flat demand from new buyers, after a couple of months where enquiries from potential purchasers had increased somewhat.
Meanwhile, new instructions to sell were more or less flat once again in August.
The downcast trends over the past month have ensured price pressures remain unchanged across the country as a whole. The headline RICS price net balance came in at -4% in August, suggesting house prices were largely unchanged.
In the near term, prices are expected to fall at the national level, with a net balance of -24% of survey participants anticipating a decline over the coming three months, down from -13% last time.
Nevertheless, at the 12-month time horizon, a net balance of +12% of surveyors project prices will increase.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said he has seen caution with buyers and sellers but also resilience in the market.
He said: “On the ground, we have seen plenty of caution and many buyers and sellers sitting on their hands.
“However, longer-term buyers of smaller houses have been looking beyond Brexit and taking on view on likely price movements.
“Other recent market surveys bear out this trend – in other words, the market is showing more resilience than we might have dared hope. Certainly, we are not finding buyers and sellers withdrawing from transactions because of worries about an imminent market correction.”
Benson Hersch, chief executive of the Association of Short Term Lenders, highlighted the need for bridging loans in an uncertain market.
He added: “Despite some cause for optimism in recent months, the latest RICS Residential Market Survey confirms a market that continues to be defined by uncertainty and low transaction volumes.
“This environment can lead to broken chains and prove problematic for developers who need longer to market their properties.
“In this situation, fast and flexible short-term finance can prove an invaluable tool for brokers, helping their clients to keep transactions alive and investors to bridge this difficult period.
“In an uncertain environment, certainty of funds becomes even more important and we continue to hear stories of lenders unable to complete on loans they have previously agreed. So, brokers need to factor this into their choices and identify lenders they can be confident will be able to deliver certainty.”
Kevin Roberts, director, Legal & General Mortgage Club, said: “Political uncertainty is dominating the headlines, but the mortgage market is something we can be upbeat about.
“The sector remains strong and resilient. Innovation from lenders, competitive mortgage rates and the ongoing support of government schemes like Shared Ownership are helping more buyers, from first-timers to those looking to remortgage.”