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Market being hurt by low stock, political uncertainty and tax - RICS

Record low stock numbers, political uncertainty and the aftermath of tax changes are the obstacles hindering the housing market, according to the latest monthly RICS survey. 

Throughout July prices were broadly soft when looking at the country as a whole - however there were many regional differences.

The strongest markets saw some prices remaining quite firm or on an upward trend in Northern Ireland, the West Midlands and the South West.

By way of contrast, the net balance of surveyors’ sentiment for central London remains negative with the pace of decline broadly matching that of the previous three months. Moreover, chartered surveyors are starting to report early signs of this flatter trend permeating outside the capital, as the price balance for the South East of England fell into negative territory, posting the weakest reading for this part of the country since 2011.

When asked about sales prices in comparison to properties’ asking prices, homes at the top end of the market (those listed at more than £1m) saw the greatest deviation in agreed prices, with 68 per cent of respondents reporting sales coming in below the asking price.

Whilst this is not uncommon in a flatter market, 33 per cent of respondents said the agreed price was up to five per cent below the asking price and just over a quarter reported between five per cent and 10 per cent under.

Alongside this, sales activity continues to lack momentum claims the RICS, with surveyors saying this is unlikely to change significantly in the next year.

The main element holding back the market continues to be a sustained deterioration in the flow of fresh listings, with new instructions dwindling for the 17th consecutive month. Consequently, average stock levels on estate agents’ books remain close to record lows, limiting choice for potential home buyers.

“Sales activity in the housing market has been slipping in the recent months and the most worrying aspect of the latest survey is the suggestion that this could continue for some time to come” says Simon Rubinsohn, RICS chief economist.

“One reason is the recent series of tax changes but this is only part of the story. Lack of new build in the wake of the financial crisis is a more fundamental factor weighing on the market. And there are some very real consequences for the economy from all of this including the impact on the ability of people to be mobile when looking for work” he says.

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