House Prices Predicted to Fall for First Time in Four Years

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House Prices Predicted to Fall for First Time in Four Years

UK house prices are expected to experience a short-term drop for the first time since 2012, according to the latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey.

House prices in central London are already falling, according to the survey with 35 per cent more property professionals reporting that prices had fallen rather than risen over the past month.

While prices are continuing to climb modestly across the rest of the UK, this trend looks set to fade, with ten per cent more respondents predicting that prices would fall rather than rise over the coming three months. This is the first time that a fall in prices has been predicted since 2012. London and East Anglia are expected to be worst hit with 43 per cent (net balance) and 33 per cent (net balance) of respondents saying that prices will fall over the next quarter.

RICS Chief Economist, Simon Rubinsohn, said:

“Sadly, for the many young people looking to enter the property market, it is unlikely that we are seeing the emergence of a more affordable market. Instead, it appears to me that what we are looking at is a short term drop caused by the uncertainty resulting from the forthcoming EU Referendum coupled by a slow-down following the rush to get into the market ahead of the tax change on the purchase of investment properties. Certainly, that’s the story we are hearing from our members. There is not at this point a sense that a fundamental shift is taking place in the market.”

Buyer demand fell across the UK for the second consecutive month and at the fastest pace since 2008, with 33 per cent more property professionals saying that demand decreased last month.

The survey revealed that in the longer term, while house prices are thought likely to regain momentum, rents look set to outpace them, with UK rents predicted to increase by 4.7 per cent year-on-year for the next five years, compared to house price increases of 4.1 per cent.

The number of agreed sales also fell for the second consecutive month with a net balance of 22 per cent of respondents reporting a fall rather than a rise in activity.

 

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