(Bloomberg) -- The U.K property market is wilting from lack of demand, leaving home prices unchanged for a second month in March.
The Royal Institution of Chartered Surveyors said its gauge of prices remained at zero, with declines in London and the southeast being offset by gains in the East Midlands, Northern Ireland and Wales.
Years of rampant price gains have stretched affordability in London, where demand from buyers continued to fall in March. Property in the capital has also been roiled by tax changes and the country’s decision to leave the European Union, and estate agents reported an increase in the number of homes being withdrawn from sale.
“Stamp duty and Brexit have killed the fluidity of the London market, said Toby Whittome at realtor Jackson Stops. “Only when the extent of the resulting economic damage is properly understood will things be able to change for the better.”
Nationally, new buyer inquiries fell for a 12th consecutive month, reflecting affordability concerns and a lack of fresh properties coming onto the market, RICS said. The number of houses being put up for sale declined further and average stock levels remained near an all-time low.
The findings “provide little encouragement that the drop in housing-market activity is likely to be reversed anytime soon,” said RICS Chief Economist Simon Rubinsohn. “Apart from the implications this has for the market itself, it also has the potential to impact the wider economy contributing to a softer trend in household spending.”
That would put more pressure on U.K. business, which saw a “subdued” first quarter as domestic factors weighed on the economy, according to a survey by the British Chambers of Commerce. Despite strong exports, the dominant services sector was “muted,” with consumer-facing industries worst affected.
“What growth we see in the U.K. economy is due principally to strong global trading conditions, rather than domestic demand,” said Adam Marshall, director general of the BCC.
Weakness in the property market suggests any boost from the cutting of stamp duty for first-time buyers in November is being outweighed by the prospect of higher borrowing costs, with the Bank of England widely expected to hike its benchmark interest rate as early as next month.
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