April saw a drop in interest from house buyers for the first time since March last year according to the latest RICS UK Residential Market Survey.
The Royal Institute of Chartered Surveyors (RICS) report that the change in stamp duty at the beginning of April triggered a rush from the buy-to-let market to complete purchases, coupled with the uncertainty surrounding the European Union referendum, has led to 22% more chartered surveyors reporting a drop in interest.
The fall in demand has been felt across the whole of the UK with buyers acting more cautiously as the EU referendum approaches.
Sales forecasts appear to reflect this level of uncertainty with sales expected to stagnate over the next three months, with London predicted to see the biggest drop off in the UK with 22% more respondents in the capital predicting sales to fall over the next three months.
Even in the face of this fall in interest, prices have continued to increase in April, albeit at a more moderate rate across the UK. The exceptions to this being central London, which experienced a slight decline and the North, with prices remain flat.
The survey reports that the long-term prediction is that house prices will continue rise as long as the lack of housing exists.
Prices are expected to rise across the whole of the UK over the next 12 months with 61% more chartered surveyors predicting prices to rise across England and Wales.
Prices in London over the next 12 months are expected to increase at a slower rate, while the rest of the UK’s prices will likely stagnate. However, over the next five years, prices are expected to rise between 3% and 5.5% per year.
Despite the recent rush in the buy-to-let market, new landlord instructions increases remained negligible with the suggestion coming from RICS that landlords are ‘reconsidering their positions in the market’.
Simon Rubinsohn, RICS Chief Economist commented: “Uncertainty is a word that features heavily in the feedback we are receiving from members responding to the survey and is contributing to the flatter trend in the latest data. More ominous is the expectation that both prices and rents will head materially higher over medium term despite existing affordability concerns with the supply pipeline continuing to fall short of household growth notwithstanding the various levers the government is pulling to try and drive development.